How will our loved ones cope financially and emotionally after we are gone? This question haunts almost every one of us. We always ponder about the well being of our loved ones in case of any eventuality. For this very reason, we make sure we have sorted our finances and protect them even before the eventuality strikes. Buying a home is a dream come true for many. It is not just an investment but an emotional milestone. Having an existing home loan is a huge responsibility. If you are someone who has a huge home loan and are worried who will repay it after you are gone, it is time you read about home loan insurance policies in India.
What is Home Loan Insurance?
Also known as “Mortgage Loan Insurance” or “Home Loan Protection Plan”, a home loan insurance policy takes care of your home loan debt in case of eventualities like death, critical illness, or permanent disability.
How is it different from a home insurance?
Unlike home loan insurance, a home insurance plan only protects you against risks to your property that are caused by an earthquake, fire, theft, storm, etc. It does not help your dependents pay the total outstanding home loan amount in your absence.
Features of Home Loan Insurance
Most of the home loan insurance plans are single premium plans. However, there are few insurers who allow you to make annual payments. In most of the cases, the premium for your home loan protection plan is included in your home loan and is paid in your home loan instalments.
In the event of the death of the insured, a lump sum amount equivalent to the outstanding home loan is paid to the nominee and the policy will be terminated.
Most home loan insurance plans do not have maturity benefit as the sole purpose of the plan is to cover the outstanding loan amount in case of any eventuality.
The Sum Assured keeps reducing every year as the outstanding home loan reduces.
The Death Benefit is usually tax-free.
The term of the home loan protection plan is equivalent to your home loan tenure.
Insurers prefer the entry age of the applicant to be at least 18 years and the maximum entry age is 50.
Loan facility is usually not allowed.
Importance of home loan insurance
When a borrower passes away and the dependents are unable to pay off the home loan, the lender has the right to foreclose the property and sell it away to collect the debt. However, the lender incurs massive foreclosure charges to do so. If the borrower has an active home loan insurance, it helps the lender avoid bad debts.
In case of any eventuality, a home loan insurance protects one's family and dependents from debt. The insurer will pay the outstanding home loan amount and your loved ones will be safe.
When you buy a home loan protection plan, you will be allowed to choose add-on covers that protect you from permanent disability, critical illnesses, and job loss. This will protect you from when the eventuality strikes. If you have these add-ons, the outstanding loan amount will be paid not only in case of death of the policyholder but also during a disability or critical illness of the borrower.
You can avail tax benefits under Section 80C of the Income Tax Act for the death benefit you get under the home loan insurance plan.
Final Words
It is not mandatory to have a home loan insurance plan. You can choose not to have one. So, if your lender processes your home loan and asks you to pick up a loan protection plan, you have the right to tell no. However, before you make a decision, consider the advantages of having a comprehensive home loan insurance plan.
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I have applied a Home loan through online. My application canceled by HDFC Limited because my net salary is Rs. 25k they said its not sufficient for the loan approval. Customer service was not so good, not so bad, it is average. I think, the rate of interest was 8-10%.
I have taken a housing loan from DHFL and the loan amount of Rs. 10,50,000 for the rate of interest of 9.8%. I am paying the EMI amount of Rs. 8500 for the tenure period of 15 years since its plot cum construction loan. Bank itself approved a loan within 3 days.
I have taken home loan directly through LIC Housing Finance .The rate of interest and the processing fee was quite nominal .This loan was sanctioned on exact time frame without any delay.This loan is still active and i have submitted the required documents as well .If EMI is paid on delay basis there will be extra charges.
I have taken a home loan from SBI and the loan amount was Rs. 30 lakh. The rate of interest was 8.15% and i am paying EMI of Rs. 25k. Customer service was good. I received this loan instantly and i applied this loan through online channel.There is no pre closure charges.
I have taken a home loan in MUTHOOT HOMEFIN LIMITED on one year before. The amount was offered of 6L which was sufficient as per my requirement. The tenure period of 7 years. My friend has suggested this finance to apply a loan. The process was smooth and sanctioned the loan within 15-20 days. Interest is nominal. Pre closure is applicable and part payment can be done of above 50K. It is nominal to pay for EMI.
I had applied for a home loan with ICICI Bank. They have taken my documentation and also completed the verification as well. The loan amount was Rs. 8.75 lakhs and the rate of interest was 8.6% i am happy with the interest.I received this loan instantly and i applied this loan through online channel.There is no pre closure charges.
I have taken Home loan directly through HDFC LTD .The loan amount was sanctioned on time without any delay .The agent shared all the details about the loan process ,I have submitted the required documents on time ,This loan is still active and there was difficulties faced so far .The loan tenure is for 5 years ,i have completed 1 year successfully and need to pay EMI for another 4 years.
I have taken home loan directly through HDFC LTD .The rate of interest was 8.25% it was nominal and all the details aboput the loan process was clearly explained by the agent .I have submitted the documents through the agent.I have got the loan amount sanctioned on time .I am satisfied with the service so far .
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KAMALAN
, thiruvananthapuram
Reviewed on Dec 05, 2019
I have taken Home loan directly through HDFC Ltd.The rate of interest and the processing fee was nominal .The loan amount got on time and there was no difficulties .This loan is still active and paying the premium through EMI basis without any hassle got this loan .I am completely satisfied with the service .
I have taken home loan directly from Oriental Bank Of commerce .The rate of interest and the processing fee was very nominal,I have got the loan amount sanctioned on time ,There was no drawbacks faced so far on using this service .From bank end all t he detail was shared and i am satisfied with the service .
I had applied for a home loan with HDFC Limited. The loan amount was Rs. 22,00,000 and the rate of interest was 8% when i was applied , but now it increased to 9.4% need to work in rate of interest. I am paying Emi monthly Rs. 18,500 and the tenure was 18 years. They have taken my documentation and also completed the verification as well executive supported me very nicely.
I have taken home loan directly through Home First Finance company India Pvt ltd.I have got the loan on time and the rate of interest was nominal .The documents was less and the agent clearly explained the loan process very clearly . This loan s still active and paying the premium.
I have taken home loan directly through ICICI Bank.The rate of interest and the processing fee was medium.I have got the loan sanctioned on time .The documents was very less and each and every detail was shared clearly by the agent .This loan is still active and there was no difficulties faced so far.
I have taken home loan directly through DHFL .The rate of interest and the processing fee was very high since had a requirement at that time taken this loan .This loan is still active and the loan got sanctioned on time .There was proper callback and follow up as well.Everything was ok but the service was average according to my point of view.
I have taken home loan which was taken directly through Union Bank of India .The rate of interest was less it was 8.5% and still this loan is active .I have got the loan amount without any delay .All the required details about this loan was shared by the agent. According to me the service is not satisfied .
I have taken home loan directly through Axis Bank .The rate of interest and the processing fee was nominal and the got the loan amount on exact time frame .I am paying the premium through EMI basis .All the detail about the loan process was clearly shared by the agent .I have submitted the required documents and the process was really satisfied .
I have taken India Infoline Housing Finance Limited directly .I have got the loan on delay basis it took 2 months of time and not got the reason for the delay .This loan is still active and there was no callback and follow up from India infoline .I have submitted the required documents and there was no drawbacks faced so far.
Bajaj Housing Finance tries all tricks to loot me -
1. Just before disbursement day, they hiked the Processing fee and increased the interest rate
2. After EMI stated, they suddenly hiked the EMI for one month by 20,000 due to a system issue at their end.
3. They arbitrarily deduct charges from your bank account in small amounts without telling and authorizations and randomly through a month.
4. Customer service and its Head are completely nonchalant and they fake ignorance.
5. It takes 5-6 months to resolve one issue. By that time, they will create another issue and you spend the next 5 months chasing them for its resolution.
Beware the NBFCs for housing finance. Its always better to go to the leading banks.
I have applied for Home loan directly through HDFC Limited .The rate of interest was very less it is only 8.35 or 8.55% criteria but i am not sure about the exact percentage .The premium is paid on EMI basis and got the loan amount on time and not faced any difficulties .I am totally satisfied with the service.
I have taken my home loan from HDFC Limited. Purchased my loan more than 5 years back. I got the loan amount of Rs. 20 lakhs and they have taken 3 months to sanctioned the loan and the delay from my side to provide the documents. I'm satisfied with the interest rate of 8.5%
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