Publication details: Property Hotline โ MB Now – 22-09-2016
Responses, opinion and view from Kartik Jhaveri
Question sent by Ajay:-
I took a home loan of Rs. 25 lakh. I want to get coverage for that amount. I am considering either home loan insurance or term insurance of Rs. 25 lakh. What are the pros and cons of both these options?
Advice given:
- In case of home loan insurance plans, the cover size is linked to your outstanding loan amount and the sum assured reduces along with the liability as one repays the loan. In the event of death of the borrower during the loan tenure, the insurance company will settle the outstanding loan with the bank.
- However most home loan insurance policies are single premium plans. Hence in case you prepay your loan before the tenure, there is no refund of premium.
- It is always better to opt for a term plan instead which provides you cost effective insurance against your liabilities including home loan.
- You can always review your insurance requirements from time to time and adjust your insurance cover accordingly.