Dear Forum Members,
I am in need of your support for taking property insurance along with home loan from SBI.
I am planning to take a loan of 40 lacks for 20 yrs for under construction property whose possession I will get on March 2017.
The SBI person told me there are two insurance you need to buy.
1. Life insurance- This is optional
2. General insurance- This is compulsory and need to take it will protect me from Earthquake and other disasters. (Don’t know premium for this for 40,00,000 lack loan amt. yet )

Life insurance is having two options
1. Rin Raksha
2. Smart shield.
Considering my age 31 yrs and my wife 28 yrs he told me I need to pay approx.. 1,70,000/- premium for Rin Raksha and
For smart shield for my wife Rs. 6117/- and meRs. 7344/- per month.
Can you please help me which insurance I need to take. which is beneficial me from lower term and lower premium perspective.
If anybody is having any info about all these confusing policy can you please forward to me…
Need your valuable advice….
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  • No bank including SBI can force borrower to take insurance policy from them / or their recommended Co. Polices from such banks are extremely costly and must be avoided.

    Further, general insurance - in India - for property covers only 'construction cost' (i.e. about 1.5K per Sq. ft) and NOT value of the property. Bank / Insurance Co. actual misrepresent this and compel person to take insurance for higher amounts (sale value of property etc.) - on one pretext or other - to ensure more premium / income to them.

    Even if one wishes to take general insurance, bank cannot force the same to buy from their associated insurer. Cost of general insurance against earth-quake / other disasters etc. for 20 Lac comes to less than Rs. 2,000/- per year.

    I suggest you to take 'Term Insurance' for you and your wife (if she is working woman) to cover your loan - liabilities (at-least) from any suitable insurance Co. quoting lowest possible premium for cover for 20 years or more and do NOT fail into bank traps for the same. You will find that premium for such cover is extremely cheap as compared to what is currently quoted to you.
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  • Don't buy life insurance from SBI. Buy it online from Aviva or someone else, and show it to SBI. You will need to write a letter saying you have got enough insurance already, attaching those life insurance copies. This will be a cheaper way.

    You have to take property insurance, but not on 40L. Your insurance will be on the construction cost, so it will be less. No way out of this.

    Lastly, what's the confusing policy? It is crystal clear, bank wants insurance that they get money irrespective of what happens to you or property.
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  • Originally Posted by nepolean
    Dear Forum Members,
    I am in need of your support for taking property insurance along with home loan from SBI.
    I am planning to take a loan of 40 lacks for 20 yrs for under construction property whose possession I will get on March 2017.
    The SBI person told me there are two insurance you need to buy.
    1. Life insurance- This is optional
    2. General insurance- This is compulsory and need to take it will protect me from Earthquake and other disasters. (Don’t know premium for this for 40,00,000 lack loan amt. yet )

    Life insurance is having two options
    1. Rin Raksha
    2. Smart shield.
    Considering my age 31 yrs and my wife 28 yrs he told me I need to pay approx.. 1,70,000/- premium for Rin Raksha and
    For smart shield for my wife Rs. 6117/- and meRs. 7344/- per month.
    Can you please help me which insurance I need to take. which is beneficial me from lower term and lower premium perspective.
    If anybody is having any info about all these confusing policy can you please forward to me…
    Need your valuable advice….


    When you sign the sanction letter for your loan from SBI, there is a clause (i think #22) which mandates you have to property insurance, so you got to have property insurance not necessarily from SBI.
    Check out LIC term policies available online (started from Jan 1, 2015) which may provide more coverage in less premium with "LIC" trust factor.

    I think with SBI life insurance there is a feature to link your home loan to a personal insurance.So in case if something happens to loan borrower SBI recovers home loan from insurance amount. Worth checking this option too..
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  • Yes, I am in the same boat and thinking of availing a 60L loan from SBI. The loan officer quoted an incredible 52,000 as one-time premium for general insurance for a period of 24 years. I believe this is calculated based on the loan amount and not on the construction cost by SBI (which is obviously wrong practice). Also I argued that I might close off the loan in say 10-15 years so do not need the general insurance for the full loan period but that was not permitted by SBI. So my opinion is that in disguise of no processing fee, they are basically trying to make up through SBI general insurance.
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  • Friends thanks a lot for your quick inputs.
    As per SBI –General insurance /property insurance premium amount present as below they had mentioned in their email ID.
    Parameter
    Fees

    property insurance
    per lac (OF PROJECT COST) approx
    for 15 years
    395/-
    for 20 years
    526/-
    for 25 years
    658/-
    for 30 years
    789/-

    My question is what is the % of Premium/insurance based on the construction cost such that we can argue with the SBI person. Is there any rule/Guideline on SBI website?
    @amit007- Yes my wife is working,
    what Term insurance you are suggesting us, it is same like Life insurance. Is there any specific insurance company in your mind which will give insurance for lower term and lower premium.
    Based on this discussion I come to know that I need a property insurance and which is must requirement, thanks.
    From SBI life insurance perspective which one is good option, Is that Rin Raksha or Smart shield. If both are bad is there any specific insurance company like LiC said earlier which can give max. benefits from Life/Term insurance perspectives.
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  • Forget SBI lfe insurance, really no point. Go for term only. I have specified in my post, Aviva or even LIC has an online term plan now.
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  • Hi Parag, i am in that boat.

    Applied for loan 60 lakh for 15 yr

    might go for loan insurance if amount is less and hassle free.

    Would talk with the manager in cpcp branch in Shankar sheth road or their boss the retd Brigediar in a day or two

    any info from your side or any one at this stage to sort out with the horses mouth
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  • Do NOT buy any kind of endowment or ULIP policy disguised as life insurance. Buy only pure term plan and for that SBI cannot force you to buy from them. It is entirely your choice. Property insurance is a good idea to have, and will not cost you more than 15000 for the 20 yrs period. Even that you can take from any insurance provider and just submit the papers to SBI. If they try to force you to buy from them, tell them to give it in writing that it is mandatory to buy from them.
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  • Originally Posted by Sansei
    Hi Parag, i am in that boat.

    Applied for loan 60 lakh for 15 yr

    might go for loan insurance if amount is less and hassle free.

    Would talk with the manager in cpcp branch in Shankar sheth road or their boss the retd Brigediar in a day or two

    any info from your side or any one at this stage to sort out with the horses mouth


    Hi Sansei,

    Do let me know how your talks go. I will be getting my agreement to sale registered sometime next week and will apply for SBI loan post that. The point of contention I feel is really the value for which the property needs to be insured. This should be calculated as the construction cost x flat area whereas SBI insists that the property be insured for the full loan amount. Obviously there is a big difference between the two and hence in the premium :(

    --Parag
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  • The easiest way is to take insurance and then cancel it later. With SBI General it will be difficult to cancel the insurance since they will ask NOC from bank. You can still cancel it without NOC but you have to raise grievance against SBI General.


    Originally Posted by dixitparag
    Hi Sansei,

    Do let me know how your talks go. I will be getting my agreement to sale registered sometime next week and will apply for SBI loan post that. The point of contention I feel is really the value for which the property needs to be insured. This should be calculated as the construction cost x flat area whereas SBI insists that the property be insured for the full loan amount. Obviously there is a big difference between the two and hence in the premium :(

    --Parag
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  • See the play of words, it is not mandatory to have insurance for house loan,

    But it is mandatory for passing the approval for house loan.

    Just chk this article

    7 Reasons Why You Should Not Buy Home Loan Protection Plan (HLPP)?

    Also are you opting for sbi max gain?

    In between you can ask for their calculation of amount. it should be less than agreement cost

    Also Insurance dept is separate from loan dept.
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  • Hi sansei,

    The article above refers to a form of "Life Insurance" which SBI has said is optional as long as you have sufficient cover from outside. So best to buy a term life policy for that purpose and submit documents to SBI.

    The General Property insurance which covers against natural calamities like earthquake, flood etc., is what SBI is claiming is compulsory from their side. I will also be asking about the insured value for General Property insurance, will keep you posted on that.

    In the meantime, do let me know about any developments from your side.

    --Parag
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  • Originally Posted by tushart
    The easiest way is to take insurance and then cancel it later. With SBI General it will be difficult to cancel the insurance since they will ask NOC from bank. You can still cancel it without NOC but you have to raise grievance against SBI General.


    Yes, but I am sure that will take a good amount of follow-up post loan processing. I am not against property insurance, just don't like the fact that SBI is forcing us to go with SBI General and also forcing property insurance for full loan amount.
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  • See the loan documents are with them along with mortgaged deeds.

    So you are free to buy either term insurance or Home insurance.

    Only thing is assigning the benefits to SBI and matching of the risk amount with your loan amt.

    What are the per lakh amount for 15 yr home insurance?

    Remember, it gets clubbed with your EMI thus increasing the instalment amount.

    PS :If I remember correctly you have been hunting around for a house for a long time?
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  • This is better. 3 years back they made me take insurance on full apartment amount. I had to agree and get insurance from SBI general since I was in a hurry. I was able to cancel it later. SBI Bank and SBI general are 2 different entities. Bank comes under RBI regulations and SBI general under insurance regulations.
    As per RBI regulation and law - property insurance is 100% optional. Once I raised a cancellation request against SBI General - they tried to find ways to reject it but you can just keep following grievance path. If he gives a reason on phone -I asked to put that in email.
    After 2 levels - they themselves called me and cancelled the insurance.


    Originally Posted by dixitparag
    Yes, but I am sure that will take a good amount of follow-up post loan processing. I am not against property insurance, just don't like the fact that SBI is forcing us to go with SBI General and also forcing property insurance for full loan amount.
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