Home Loan Insurance

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He cover on such a policy keeps reducing with the amount of EMIs (Equated Monthly installments) paid off. So, th loan amount covered reduces with the loan amount outstanding Lenders nowadays offer home loans bundled with insurance policies and the amount payable towards the same is a part of the loan as well as the loan EMI. Tough insurance home loan tie-up offers convenience to the borrower; most insurance companies offer the single premium or the ‘limited premium paying term, plan to home loan seekers. This may prove to be a costly affair in ht long run. Limited Premium Payments (LPP) is not favorable on one more count. It has been observed that home loan takers pay-off the loan well within the tenure: in our example, within 10-12 years. Many are also under the illusion that if they are sufficiently covered, they don’t need to insure themselves further just to cover the loan amount. But they should understand that the current life insurance cover was actually meant to serve a different purpose like retirement or financial needs of the family in their absence. If case of an eventuality the survivors will find it difficult to apply off the outstanding home loan amount. And it wouldn’t hurt the HFC to sell the property to recover the dues in case of a loan payment default. This alone makes a case for individuals to consider buying a term plan/loan cover term assurance. As housing loan durations are long, it would be prudent to take such a cove. So go ahead and follow your dream…