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  • Home Loan Insurance

    Home loan insurance, also known as mortgage insurance, has become extremely popular in today’s world due to the increasing prices of properties. Since the events in our lives are unpredictable, most people tend to secure their future along with the future of their loved ones with the help of home loan insurance. To know how it benefits us, we must know what home loan insurance is.

    What Is Home Loan Insurance?

    A home loan insurance plan is a scheme under which the insurer will settle the outstanding Home Loan amount with the lender or the bank in case of an unforeseen situation. Some of the comprehensive home loan insurance plans offers cover for the applicant, the house, and all its contents. The premium that is paid towards home loan insurance is applicable for tax benefits.

    Why Is Home Loan Insurance Important For Lenders?

    Lenders do not like their loans to turn into bad debts. Obviously, they would want to protect their money. In order to avoid a home loan turning into a very bad debt, lenders need home loan insurance. In the event of the borrower’s demise, the lender will be losing out on a lot of money, especially when the borrower was the only earning member of the family.

    Why Is Home Loan Insurance Important For Borrowers?

    As we already know, home loan insurance plan covers the outstanding home loan amount in a situation where the borrower fails to pay his/her debts. Such a situation may arise due to the borrower’s job instability or his/her demise. You may choose a regular plan or opt for one that comes with additional features and riders more enhanced coverage. Home loan insurance is important for the borrowers as it ensures that the dependents of the borrowers don’t become homeless in his/her absence or crisis situation.

    Aspects To Be Considered Before Opting A Home Loan Insurance:

    The ways that you may choose to insure the home loan are mentioned below:

    • Term insurance – It is purchased so that all your liabilities and debts are taken care of.
    • Separate home insurance – This insurance scheme only takes care of your home loan outstanding when you are unable to pay it off.

    Most of the home loan insurance schemes offer reducing coverage with them. The size of the coverage is linked to the home loan outstanding. Thus, the sum insured goes down when an individual repays the loan amount. However, in case of a term insurance, coverage stays the same. In case of term plans, the sum assured is received by the nominee who can make the payments to the lender or the bank for settling the loan. In case if a home loan insurance plan, the insurer directly makes the payments for the home loan outstanding to the lender for settling the loan.

    Home loan insurance can be purchased either from a general insurance company or a life insurance company. The ones that are offered by the general insurance companies need to be renewed on an annual basis. The policies offered by life insurance companies are for longer terms.

    It is of utmost importance that you ask about the riders and add-on covers. It is beneficial to get a plan that covers situations like unemployment and disability, along with death. Also check if the policy covers just natural demise or accidental demise too.

    The loan tenure and insurance cover period must match. It is not advisable to opt for a shorter cover period thinking that you will extend it later. There lies a very strong chance that you might forget to extend in the long run. Also, as you grow older, it only becomes difficult for you get a good coverage. Even if you get one, it will be pretty expensive.

    When you plan to purchase a particular protection scheme, ensure that it matches all your requirements. Compare various products in the market and pick the one that suits you the best. Before you bundle up your EMI payments with premium payments, sort your expenses.

    Features Of The Home Loan Protection Plans:

    • Payment of premium – Most of the home loan protection plans are all single premium policies. This means you make to make payment for the premium only once. As the amount of the premium is pretty high, lenders often add the premium amount to the loan amount. The borrower pays the premium along with the equated monthly instalments. For example, if you borrow a loan amount of Rs.30 lakh and the home loan protection that you opt for costs Rs.1.5 lakh, you will have to pay your EMIs calculated on Rs.31.5 lakh.
    • Life cover – Most home loan protection plans offer life coverage equivalent to home loan outstanding amount. As soon as the loan amount is cleared, the cover comes to an end.
    • Riders or Add-ons – Several insurance providers offering home loans insurance schemes provide optional rider plans to enhance their cover benefits. The riders that can be availed with home loan protection plans are mentioned below:
      • Terminal Illness
      • Accidental Death
      • Jobless up to three to six months of EMI payments
      • Disability

    The policy cost along with these additional features is more expensive than the other regular home loan insurance plans.

    Benefits Of Home Loan Protection Plans?

    • In the event of unfortunate demine of the borrower, the insurer repays the outstanding loan amount to the lender or the bank.
    • Tax benefits can be availed under Section 80C of the Income Tax Act.
    • The borrower can avail add-on coverages or riders to enhance your home insurance plan. Disability rider r critical illness rider ensures that the outstanding loan amount is covered not only in case of an unfortunate demise, but also during a disability or critical illness of the borrower.

    How Are Home Loan Insurance Plans Different From The Other Insurance Schemes?

    Regular insurance plans can be purchased anytime. However, the home loan protection plans cannot be bought at any given point. It can only be purchased when you have an existing housing loan or applying for a new home loan. Also, home loan insurance schemes are reducing covers that include the outstanding amount of loan only. The cover is only available till the end of the tenure of the loan, unlike other regular insurance policies.

    Is Buying A Home Loan Insurance Plan Mandatory?

    Purchasing a home loan protection plan is not mandatory. It is completely up to your choice if you wish to buy it or not. However, it is only advisable that you protect your future with a home loan insurance plan.

    Difference Between A Home Loan Insurance And A Home Insurance:

    Home loan insurance and home insurance are completely different. However, they sound similar and people often get confused between the two of terms.

    Home Insurance Plans:

    The home insurance plans, also known as homeowner’s insurance, offers coverage to your house and its contents against perils like fire, explosion, lightning, etc. It also offers protection against theft or burglary.

    Home Loan Insurance Plans:

    The home loan insurance plans or home loan protection plans clear your home loan debt in case you are unable to repay the borrowed amount due to death, disability or critical illness.

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    Home Loan Insurance Reviews

    • Indiabulls Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I hold my housing loan with Indiabulls for an while. They have given me loan on time without any delay, their service was good. The process in getting loan was simple, i got loan on time. Their rate of interest was nominal, still this loan is running.
      Was this review helpful? 0
      , new delhi
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "Best service"
      0.5 4.5/5 "Excellent!"
      I hold my housing loan with HDFC LIMITED for an while, their service is good, but not sure about the rate of interest like every 2-3 months they are increasing my limit up to 0.05% i need to check with the customer care regarding this, the loan amount was sufficient, they have not charged me processing fee.
      Was this review helpful? 0
      , bangalore
      Reviewed on Apr 19, 2019
    • IIFL Home Loan
      "NOT SATISFIED"
      0.5 1.0/5 "Really Bad"
      I have previously used the housing loan with the INDIA INFOLINE HOUSING FINANCE LTD and transferred to another bank because the rate of interest was higher. They have offered the pre approved so taken. There are hidden charges applicable also it is floating rate of interest with this bank which was 32% which am not happy.
      Was this review helpful? 0
      , mumbai
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "GOOD"
      0.5 4.0/5 "Great!"
      The documentation process was easy and simple with the HDFC LIMITED and housing loan was taken before few days. The rate of interest was lesser so transfered the loan with this bank. The duration is for 30 years to repay the loan. There is a pre closure option with this loan.
      Was this review helpful? 0
      , mumbai
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "Very good"
      0.5 4.0/5 "Great!"
      I am satisfied with loan amount of 8L with the rate of interest is 8.65% , EMI amount is 6769 rupees and tenure is 20years. It was taken last two years back from HDFC LIMITED and their overall service is good but I would like close this loan after 3 to 4 months.
      Was this review helpful? 1
      , new delhi
      Reviewed on Apr 17, 2019
    • Axis Bank Home Loan
      "Process is good"
      0.5 5.0/5 "Blown Away!"
      My home loan is with Axis Bank and the process to get the loan is good. The disbursement happened on time and the customer support and response is good. The documentation was also a smooth process. The rate of interest and processing charges is normal.
      Was this review helpful? 0
      , chennai
      Reviewed on Apr 17, 2019
    • IDBI Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I took housing loan with IDBI bank for an while, the loan amount which they have given me was good, it was sufficient based on my requirement, the rate of interest and their processing fee which they have charged me was nominal, AS it is government bank their service is not that up to the mark, but the interest rate was less so i applied.
      Was this review helpful? 0
      , mumbai
      Reviewed on Apr 17, 2019
    • LIC Housing Home Loan
      "Interest rate should be reduced"
      0.5 4.0/5 "Great!"
      LIC housing is good but interest is the concern, I took the amount Rs. 20 lakhs for 20 years. They quoted 10.8% its a floating one, they didn't revise the interest as per the RBI guideline. But they do have balance transfer, part payment and other options.
      Was this review helpful? 0
      , chennai
      Reviewed on Apr 17, 2019
    • Aavas Financiers Limited Home Loan
      "Very good"
      0.5 4.0/5 "Great!"
      My experience is good with Aavas finance home and It was taken one year back. My loan amount is 10L and rate of interest is 8.35%, am paying emi amount is Rs.11,648. Recently one month back my emi amount got decreased and I paid only 9441 rupees. The tenure is 20years and everything is nominal with this loan.
      Was this review helpful? 1
      , palanpur
      Reviewed on Apr 17, 2019
    • LIC Housing Home Loan
      "Avrage"
      0.5 3.0/5 "Satisfactory"
      I have taken one home loan from lic housing finance last 3years back , and my loan amount is 10L and tenure is 15years ,emi amount is 10700K and rate of interest is 9.5% is high , and their customer service is good , and response is also good, But I am not much happy with this loan,
      Was this review helpful? 3
      , hyderabad
      Reviewed on Apr 16, 2019
    • Punjab National Bank Home Loan
      "Part payment option is good"
      0.5 4.0/5 "Great!"
      I have my home loan also with Punjab national bank. The customer support is good and there are no hassles in the process. The interest rate and processing charges are nominal. The best about this bank is there is a part payment option so I close my loan at any time without any charges.
      Was this review helpful? 2
      , new delhi
      Reviewed on Apr 16, 2019
    • Tata capital Home Loan
      "Excellent services"
      0.5 5.0/5 "Blown Away!"
      It was a pretty smooth process with Tata capital for the home loan. The customer services are good and they were responsive through the process. The rate of interest is 8.35% fixed for seven years. After which the interest rate would be as per the RBI rule. The processing fee was normal, it is of 5 to 10K.
      Was this review helpful? 1
      , pune
      Reviewed on Apr 16, 2019
    • HDFC Limited Home Loan
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      The documentation process was easy and quick and HDFC LIMITED have given the good loan amount which was satisfactory. The rate of interest was nominal and it is floating, duration is for 2-3 years for repaying the loan, it has been closed before nearly 10 years.
      Was this review helpful? 1
      , vadodara
      Reviewed on Apr 16, 2019
    • Punjab National Bank Home Loan
      "Should be flexible and customer friendly"
      0.5 3.5/5 "Pretty good"
      I am not convenient with PNB housing, for everything I need to visit to the bank even if I want to check the outstanding I need to walk in. I suggest it would be great if they upgrade their technology, the bank staff are not responsive. But the interest rate is better, I took the amount of Rs. 10.5 lakhs for 15 tenure, in a year only once I can do the part payment its not flexible.
      Was this review helpful? 0
      , chennai
      Reviewed on Apr 15, 2019
    • HDFC Limited Home Loan
      "GOOD"
      0.5 4.0/5 "Great!"
      I am using the housing loan with the HDFC LIMITED from last 3 years. The documentation process was simple and fast with this institute. The loan amount was good and also the rate of interest was nominal. The duration for repaying the loan is for10 years.
      Was this review helpful? 0
      , navi mumbai
      Reviewed on Apr 15, 2019
    • ICICI Bank Home Loan
      "Best Experience"
      0.5 4.0/5 "Great!"
      ICICI gave me the long tenure of 15 years for the housing loan, they gave me best interest around 8.5% now it got revised to 8.8% for the loan amount of Rs. 30 lakhs, Based on the property my loan was pre sanctioned, the documentation was simple without too much of paper work.
      Was this review helpful? 1
      , thane
      Reviewed on Apr 15, 2019
    • ICICI Bank Home Loan
      "Good process and service"
      0.5 5.0/5 "Blown Away!"
      My home loan is with ICICI Bank. The services are excellent. I got a proper response and the paper work was taken on time. I did not face any inconvenience. The rate of interest and processing charges is nominal too. The after loan service is good.
      Was this review helpful? 1
      , mumbai
      Reviewed on Apr 15, 2019
    • HDFC Limited Home Loan
      "Best service "
      0.5 5.0/5 "Blown Away!"
      I have taken home loan through HDFC LIMITED . I am happy with their services considering the loan experience. The tenure period is fair enough . The Application process was smooth and the loan amount was credited to my account with in few days. Rate of interest is nominal .
      Was this review helpful? 0
      , ghaziabad
      Reviewed on Apr 15, 2019
    • IDBI Home Loan
      "AVERAGE"
      0.5 3.0/5 "Satisfactory"
      I have applied for the IDBI BANK housing loan and they have given the rate of interest which was higher than others which they need to decrease. The process was quick and they have given the satisfactory loan mount. The duration for repaying the loan is 20 years.
      Was this review helpful? 0
      , bangalore
      Reviewed on Apr 15, 2019
    • Tata capital Home Loan
      "Very good experience"
      0.5 4.0/5 "Great!"
      I have taken home loan from Tata Capital , they gave me the interest around 9% its a floating one. Initially my interest was 8.35% but within six months of time they reversed the higher interest. Anyway the process was easy. The field executive came to my place and collected the paper for the verification, it was simple. I got the loan amount within 8 months.
      Was this review helpful? 0
      , pune
      Reviewed on Apr 15, 2019
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