Top 5 Reasons Why You Need Home Loan Insurance

A home is more than just four walls and a roof; it’s a place where dreams are woven into the very fabric of life. While the thought of owning a home is exhilarating, it also comes with responsibilities, including protecting your investment. A home loan is a big commitment to undertake, especially if it is the first home you are buying. The EMIs can seem high and the tenure, too long. Nonetheless, most people undertake the home loan journey so that they can be the proud owners of their own abode. However, most neither consider nor prepare for the worst-case scenario, which is what home loan insurance intends to tackle.

What Is Home Loan Insurance?

Home Loan Insurance, also known as Home Loan Protection Plan (HLPP) or Home Loan Insurance Plan, is a type of insurance designed to protect your family and your investment in case of unforeseen events, primarily the policyholder’s demise. It provides financial coverage to pay off the outstanding home loan balance, ensuring that your loved ones can keep the home without the burden of the loan. Here are the primary components of home loan insurance:

Premium Payments: Home Loan Insurance involves regular premium payments, usually made along with your home loan EMI. The premiums are determined based on factors such as the loan amount, policy term, and the policyholder’s age.
Policy Term: The policy term typically matches the tenure of your home loan. For instance, if your home loan is for 20 years, the Home Loan Insurance policy will also have a 20-year term.
Coverage Amount: The coverage amount is equal to the outstanding home loan balance at any given time. As you continue to repay the loan, the coverage amount gradually decreases in line with the decreasing loan balance.
Nominee: You designate a nominee when purchasing Home Loan Insurance. The nominee is the person who will receive the insurance payout in the event of the policyholder’s demise.
Customization: Home Loan Insurance policies often offer customization options, allowing you to adjust the coverage amount, policy term, and other parameters to suit your specific needs.

5 Compelling Reasons To Get Home Loan Insurance

While home loan insurance is always a wise financial choice, there are several reasons why it is doubtlessly worth investing in:

1. Financial Security for Your Loved Ones

Life is unpredictable, and none of us can foresee what the future holds. In the unfortunate event of the policyholder’s demise, Home Loan Insurance ensures that the outstanding home loan amount is settled. This financial safety net provides peace of mind to your loved ones, sparing them the burden of repaying the loan during a challenging time.

2. Protecting Your Home Investment

Your home is likely one of the most significant investments you’ll ever make. Home Loan Insurance safeguards this investment by ensuring that your loved ones can keep the home without the looming threat of foreclosure due to outstanding loan payments. This protection ensures that your family continues to enjoy the security and comfort of their home.

3. Easing the Financial Burden

Life is full of unexpected challenges, from medical emergencies to job loss. In such situations, repaying a home loan can become daunting. Home Loan Insurance comes to the rescue by covering the outstanding loan amount, giving you the breathing space needed to navigate difficult times without losing your home.

4. Affordable Premiums

Home Loan Insurance typically offers affordable premiums, making it a cost-effective way to secure your family’s future and protect your home investment. The peace of mind it provides far outweighs the relatively small premium payments.

5. Customized Coverage Options

Home Loan Insurance policies often offer flexibility, allowing you to tailor the coverage to your specific needs. You can choose the coverage amount, policy term, and premium payment frequency that aligns with your financial goals and the tenure of your home loan.

How to Buy Home Loan Insurance?

If you have decided to buy home loan insurance then, congratulations, you have made a great choice. Here’s how you can go about it:

Reach out to your home loan lender or financial institution.
Get information about the Home Loan Insurance options available.
Select the coverage amount that matches your outstanding home loan balance.
Understand the premium structure based on factors like loan amount, policy term, and age.
Fill out the Home Loan Insurance application form with relevant details.
Designate a nominee who will receive the insurance payout if needed.
Pay the initial premium amount, often included as your home loan EMI.
The insurer will review your application, underwrite the policy, and issue it to you.
Carefully review and keep a copy of the policy document.
Ensure regular premium payments to keep the policy in force.

Home Loan Insurance in India

Following is a list of prominent insurance providers offering home loan insurance plans in India:

Situation	Approval
LIC	Mortgage Redemption Assurance
ICICI Prudential Life Insurance	Home Loan Insurance
SBI Life Insurance	RiNn Raksha
Future Generali India Life Insurance	Loan Suraksha Plan

Conclusion

Home Loan Insurance is a shield that safeguards your family’s financial security and your cherished home investment. In the event of unforeseen circumstances, it ensures that your loved ones can retain the home without the burden of repaying the loan. This invaluable protection eases financial strains during challenging times, offers cost-effective premiums, and allows customization to suit your needs. To obtain Home Loan Insurance, contact your lender, understand options, select appropriate coverage, and complete the application. With Home Loan Insurance, you can secure your homeownership dream and provide lasting stability for your family, regardless of life’s uncertainties

AMIT ARORA

I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.