Home loan insurance : A long-term financial commitment for the borrower and their entire family is required when building or purchasing a dream home. A home loan requires regular EMI (equivalent monthly payments) to be paid back.
In addition to home loans, a number of banks offer home loan insurance, which provides security because the borrower’s surviving family members are not obligated to pay back the loan in the event of their death.
Home loan insurance is not required and is not governed by RBI, IRDA, or the Reserve Bank of India. However, loanees can purchase home insurance from banks and other financial institutions.
What is insurance on a home loan?
A plan to protect home loans is known as home loan insurance or the Home Loan Protection Plan. When you borrow money to buy a house, the majority of banks also provide insurance for your home loan.
In accordance with this insurance policy, in the event of the borrower’s death, the loan provider settles the payment of the home loan amount with banks, NBFCs, or housing finance companies.
How to buy home loan insurance
If a customer wants to buy home loan insurance, they can pay the insurance premium all at once or over time with the home loan EMI.
Along with the EMI on the home loan, the monthly payment for home loan insurance will also be taken out.
Benefits of home loan insurance
Protect your family In the event of the borrower’s death, the family is responsible for paying the remaining loan payments. However, the family is asked to leave the house if they are unable to repay the loan. The issue is resolved by home loan insurance.
When a borrower selects home loan insurance, their family is protected from having to pay back the loan or move out of their home in the event of their death.
Protects the Asset and Other Collateral
In the event of the Borrower’s Death, the Lender Has the Right to Seize the Home and Other Valuable Assets to Repay the Loan Balance. Even if the family members are able to save the house in some instances, they may still lose their valuables. Home loan insurance can be used to pay back the balance on the loan in this case.
Tax Benefits
From the tax code Under Section 80C of the Income Tax Act of 1961, home loan insurance premiums can be deducted from a person’s taxable income.
