Is home insurance mandatory with home loan. Actually I have applied for a loan from IDBI bank. Before approval of the loan they are assisting me to take home insurance as they are saying that it's mandatory. Is it so?
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  • Originally Posted by ashok4814
    Is home insurance mandatory with home loan. Actually I have applied for a loan from IDBI bank. Before approval of the loan they are assisting me to take home insurance as they are saying that it's mandatory. Is it so?


    The same happened to me. I think they make it a pre-condition for sanction if they think your current insurance/assets will not cover for the loan.
    I don't mind it as I was planning to take it anyway.
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  • Originally Posted by mobilizedport
    The same happened to me. I think they make it a pre-condition for sanction if they think your current insurance/assets will not cover for the loan.
    I dont mind it as I was planning to take it anyway.

    I have taken loan from HDFC..they havent put any pre-condition for insurance though I am planning to take one..
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  • Originally Posted by Ranjit.jha
    I have taken loan from HDFC..they havent put any pre-condition for insurance though I am planning to take one..




    what is the rate u r getting with HDFC ?
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  • No this is not at all mandatory however it may be a good idea to take this once you plan to move into the flat.
    Home insurance charges are from Rs.70 to Rs.150/- per lac
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  • Originally Posted by ashok4814
    Is home loan manatory with home loan. Actually i have applied for a loan from IDBI bank, before approval the loan they are assisting me to take home insurance. they are saying it's mandatory. IS IT SO?

    I was also insisted by HDFC to take home insurance. But I tols them I am not goind to take it, as I was already had a life insurance of 60 lacs. Under he home insurance you get a cover for property damage against Flood, earthquake, etc. But in pune there is no history of earthquke and flood. Plus they were adding the one time premium to my home laon account, which means that I ahve to pay the interest on the premium comp[onent for 20 yrs, as my home loan term is 240 months. The cover was only for 5 years. In this ciritical illness is also covered which are very rare to happen atleast in my case. So you think from all angles and then take a decision. These bank people some times prepare some stupid products and try to sell you.

    thankyou.
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  • Originally Posted by mobilizedport
    The same happened to me. I think they make it a pre-condition for sanction if they think your current insurance/assets will not cover for the loan.
    I dont mind it as I was planning to take it anyway.


    you are right. but i have already taken the term policy..that's why i don't want to take the home insurance.
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  • Originally Posted by ashok4814
    you are right. but i have already taken the term policy..that's why i don't want to take the home insurance.


    Is it better to take Term Policy rather that Home insurance??
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  • There is fundamental difference between home insurance and owners insurance.
    Home insurance is for your under construction home and once complete for the structure of your home.
    Other insurance is for you - since you have taken the loan from the bank and if something happens to you - the bank gets rest of it's money from the insurance and your nominee gets the home.
    Both these are expensive if you take from the bank.

    IMHO - there is no real need for home insurance. It really doesn't protect you from anything... For your loan insurance - better take term insurance policy - will work out cheaper too...
    again - do you homework before you take the leap.
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  • Originally Posted by sonirohit
    There is fundamental difference between home insurance and owners insurance.
    Home insurance is for your under construction home and once complete for the structure of your home.
    Other insurance is for you - since you have taken the loan from the bank and if something happens to you - the bank gets rest of it's money from the insurance and your nominee gets the home.
    Both these are expensive if you take from the bank.

    IMHO - there is no real need for home insurance. It really doesn't protect you from anything... For your loan insurance - better take term insurance policy - will work out cheaper too...
    again - do you homework before you take the leap.


    Could you suggest the best term policy available in the market :) ??
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  • Well, when I applied for loan to axis bank, they had it mandatory to take house insurance. I didn't think much and got it, because I was planning to get it anyway. The premium was around 11000/- (one time premium for a period of 20 yrs) and the some assured was around 20 lacs. I didn't read the fine prints though, but I think it covers for natural disaster (flood/earth quake etc) and fire...
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  • It would be better if you avoid these combo packs..but if there's no other options(thts the usual case when buyers have no alternate)...I would then do read all hidden terms and conditions/research from internet about this before taking decision.
    A flat with a monthly EMI is already costly and if u add insurance costs..it would scale up even further..

    Regarding term insurance..I've recently switched from LIC to aviva just for reducing yearly premiums..other options are HDFC/SBI..just search in internet n u'll get lots of options..
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  • Ashok4814,


    Any day, term plan is better than home insurance plan. However, bank would force you to take home insurance from the same bank as they have tie ups with an insurance company/agent (or have their own company).

    There are term insurance plans which will return all the premium paid by you after the policy ends. So you don't end up loosing money for insurance needs while covering the risk involved by increasing your debt liability (as a loan taker).

    The other major difference between term plan and home insurance plan is that term plan is for a specific yet fixed sum assured amount (say 20 lacs). And the sum will remain fixed for the entire period of policy (say 20 years). But home insurance works on diminishing or reducing sum assured in relation to your outstanding loan amount (check the attached picture).
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  • Originally Posted by amit2222
    Ashok4814,


    Any day, term plan is better than home insurance plan. However, bank would force you to take home insurance from the same bank as they have tie ups with an insurance company/agent (or have their own company).

    There are term insurance plans which will return all the premium paid by you after the policy ends. So you don't end up loosing money for insurance needs while covering the risk involved by increasing your debt liability (as a loan taker).

    The other major difference between term plan and home insurance plan is that term plan is for a specific yet fixed sum assured amount (say 20 lacs). And the sum will remain fixed for the entire period of policy (say 20 years). But home insurance works on diminishing or reducing sum assured in relation to your outstanding loan amount (check the attached picture).

    Hi Amit, Thanks for replying. I never heard about the term insurance plan which will return all premium paid by us. Could you please let me know the details of such plan and company's name?
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  • Ashok,


    Here are the details:
    LifeGuard offers a choice of 2 life insurance plans: LifeGuard with Return of Premium and LifeGuard Single Premium.
    https://www.iciciprulife.com/public/Life-plans/Life-Guard-Benefits.htm

    I just happen to know about this as one of my close friend took it from another friend of mine...

    Also, see attached picture for a comparison chart of different products.

    I suggest you to talk to your bank (HL provider) first before buying any product. Tell them that you are not interested in their insurance product and examine what their response is.
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  • I am also in same situation..tossed up bw HL insurance or term insurance... but my bank (HDFC) is not forcing for their insurance....
    Their home insurance plan for 30 lac would cost 80k approx and would provide cover for 5 years. It would also cover critical illness..accidental benefits..loss of job(only 3 months EMI)..education of children..damage to building (fire/burglary etc)...
    An average term plan for 30 lac cover would cost arnd 5k-6k p.a (For 5 year cover 5x6000 = Rs 30000).

    So I believe term insurance would work out lot cheaper...

    Can compare different term insurance plans here
    http://www.policybazaar.com
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