Home Loan Insurance: Should you get one?

Home loan insurance is a vital product for homeowners. It protects them and their family in emergencies

Due to the rising value of residential properties across the country, home loan insurance, which is also known as mortgage insurance, has almost become a necessity. Most people buy home loan insurance to safeguard their future and the futures of their family members. This deep dive will help you understand home loan insurance and its benefits.

What is home loan insurance?

Home loan insurance is sometimes also called a Home Loan Protection Plan (HLPP). It is a policy offered by almost every lending institution. The insurer pays the lender the outstanding balance of their home loan amount if the borrower dies due to unexpected situations.

In the event of the borrower's death, the insurance company pays the remaining balance of the home loan to the lender. The term of the policy and the loan is usually the same. By purchasing home loan insurance, borrowers ensure that their family will not have to repay the home loan or abandon the property due to non-payment of the loan balance after their death.

Benefits of home loan insurance

Here are some of the benefits of having home loan insurance:

• Home loan insurance gives a lump sum payout that can settle an existing mortgage. The recipient of the home loan or the policyholder receives a lump sum payment.
• A single home loan insurance policy can include all the borrowers on a combined loan.
• You can include medical issues, such as disability and other major illnesses, in a home loan insurance plan for an additional price.
• Borrowers can convert their insurance premiums into money that can go towards their home loan EMIs.
• Home loan insurance covers many medical conditions, including cancer and heart attack.
• Most home loan policies are single-premium contracts. It indicates you must pay for the premium once. Lenders frequently add the premium to the loan amount. The borrower pays the EMI along with the premium.
• You can avail of tax benefits using home loans under section 80C.

Importance of home loan insurance

Home loan insurance insures the outstanding home loan amount if the borrower defaults on their payments. Such an event can occur if the borrower dies. You can choose between a basic plan and one with additional features and riders for more comprehensive coverage.

Additionally, it may help to buy a policy that covers unemployment or illness, along with death. Also, check if the insurance includes only natural death. You can purchase home loan insurance at any lending institution. IDFC FIRST Bank also offers home loan insurance at reasonable rates. With IDFC FIRST Bank, you get home loan insurance and loan for house with interest rates within your budget.

Besides offering the lowest home loan interest rates in the market, IDFC FIRST Bank also gives you the option to customise your insurance. You can apply for home loan insurance through IDFC FIRST Bank’s mobile app. The process is fast, easy, and requires minimal paperwork.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.