You might have already insured your life, besides taking cover for your health, car, TV, fridge, jewellery and other such valuables. But what about the house you are living in, particularly the home loan you have taken recently? Have you ever bothered what will happen to your family if something happens to you? Even your life cover may not be adequate as in India most people get their life insured for an amount less than Rs 5 lakh, while the amount of home loan may exceed Rs 10 lakh. In case of some people, depending on their income and requirements, this amount may even go up to a few crore of rupees. Undoubtedly, there is a need to take cover for the largest investment of your life, whereby close to 40 to 50 percent of your salary goes towards paying the EMIs only.

Says Kartik Jain, head marketing, ICICI Lombard, Immediately after opting for a home loan, securing the liability becomes the biggest worry. A home loan cover thus insures the home loan undertaken. The cover is beneficial to all availing home loans. The loan cover, in fact, provides a lump sum on death of the life assured during the term of the plan. The lump sum will be a decreasing percentage of the initial sum assured. As the outstanding loan decreases as per the loan schedule, the cover under the policy decreases as per the policy schedule. Since this is a pure risk cover plan, no benefits are payable on survival at the end of the policy term.

Some life insurance companies, however, provide the home loan cover under term plans, which some general insurance companies bundle this cover along with the householder policy.

Informs Sandeep Chandra, national head motor and household insurance, Tata AIG General Insurance Company Ltd, Home loan cover is a home insurance cover that is bundled and sold along with the home loan that protects the insured/customer against any loss or damage to the structure of his home (building) against fire & allied perils. The coverage is offered against loss to property on account of the specified set of events that is covered as part of fire and allied perils.

According to him, it is important to take a home loan cover because it ensures that the customer does not suffer any financial loss due to destruction or damage to his property on account of above-mentioned perils. The insurance will pay for the repair/reconstruction of the damaged asset. It protects financiersinterest too by safeguarding and providing the insured with the security that there is a back up in case there is a financial loss and he/she is constrained to pay his or her dues to the financier on account of damage or destruction to the insured property.

Although separate home loan covers are also available in the market, insurers advise people to take householders insurance along with the home loan cover.
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  • On home loan insurance

    Yes, you must insure your home loan as you will never want that your family members bear the brunt of your financial liabilities in case you face any mishaps.

    Appreciably, most of the good HFCs are providing insurance cover along with the loan (on payment of insurance premium of course!!!).

    But if you have suitably covered yourself with a life insurance policy, the beneficiary can always the pay off the loan derived from the same (in case of loss of life). Thus there won;t be any need of taking separate policy for home loan cover...!
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