4000, 6000, 10000, 12000…hmm…sigh!!!These are the property prices per sqt feet in most of the cities. Any remote locality has exuberant prices. When such is a case, salaried employees like you and me cannot think of buying a home without a loan. Home loan premiums become a part of our monthly expenditure report.
While deciding on your loan, most of the banks talk about the EMIs and interest rates, but not many talk about the insurance associated with home loan and the importance of that. Here is all that you need to know about the insurance associated with your loan.
Why do I need a life insurance when I am taking a home loan?
Home loan comes with a fine print which says that the possession of your home is proportional to the principle amount of the loan that you have taken. Home loan repayment can be a matter of 5, 10, 15 or even 20 years. During this long tenure, in case of any unforeseen incidents, your home will not be in your possession completely. In such cases, you would still want your family to be secured. So, it means that a life insurance coupled with your home loan would come into picture and help your family own the house in case of any such accidents.
How much of life insurance is required?
The amount of life insurance is dependent on your loan amount. There are some banks which offer a free life insurance with your loan amount. There are still some other banks that provide you cover for your decreasing loan amount…i.e. if your loan amount is decreasing then your cover amount declines in line with your loan amount. Check out for all the offers from the banks and read the terms and conditions carefully before you decide on your financer.
What happens in case of some unforeseen incidents?
God forbid! But in case of any unforeseen incidents, the banks offer to wave- off the entire loan amount so that your family could still have the house for themselves in spite of your regretful absence.
What If I still don’t want to take life insurance?
As mentioned earlier, life insurance is purely dependent on your loan amount. Sometimes an insurance is compulsory along with However if the loan amount is not very huge in comparison to your income, some banks offer to grant you the loan without a life insurance cover. This comes with a clause of providing a guarantee for the amount that you have taken.