Take home loan insurance or buy term plan, experts are telling in which benefit

Photo:India TV Home loan insurance

Home Loan: The festive season is about to start. Starting from Rakshabandhan, the festive season will continue till Diwali. In this many people will fulfill their dream of home. You will also be among those who are planning to buy a house. If you buy a house, you will definitely take a home loan. Banks will ask you to get home loan insurance. Banks do this to protect the loan amount in case of any untoward incident. In case of any untoward incident to the insured before repayment of the loan, it is the responsibility of the insurance company to pay the outstanding amount. Now the big question arises whether it is beneficial to insure a home loan or buy a term plan. Let us answer this important question from the experts.

Buying home loan insurance is expensive

According to banking experts, taking home loan insurance is costlier than a term plan. This is because when you take a home loan, banks ask you to cover the entire amount. Its premium has to be paid in one go. If you take a home loan insurance of Rs 50 lakh, the premium amount is also added to the home loan. This increases the EMI. With only the home loan being covered, the insurance cover also decreases with the reduction of the loan amount. This causes double damage. Most banks do not give back the amount paid on insurance even if you repay the home loan prematurely.

In this way understand the mathematics of loss

Let us assume that if you took a home loan of 50 lakhs for 20 years and after paying this EMI for 5 years, the remaining liability is 35 lakhs. At this time, in case of an accident with the insured, the company will pay only the remaining home loan. That is, the coverage amount of your home loan protection plan of Rs 50 lakh will now come down to 35 lakh.

Therefore it is beneficial to take a term plan

If your age is between 30 to 35 years, then you can buy a term plan of Rs 50 lakh from the insurance company at an annual premium of Rs 10 thousand. One can take a cover of up to one crore rupees at an annual premium of 12 to 20 thousand rupees. At the same time, if you take a home loan insurance of Rs 50 lakh, then you will have to pay a premium of around Rs 60,000. Term plans are a very cheap option at this scale. Also, your insurance cover in a term plan does not decrease during the policy term. At the same time, the cover in the home loan insurance keeps on decreasing along with the loan amount. In term plan, death, illness, employment, home loan of the insured can also be covered, whereas this facility is not available in the insurance of home loan.

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Shivam Bangwal

Shivam Bangwal is an Indian based entrepreneur who is a tech, travel and coding enthusiast with a post graduation degree on Master's of Computer Applications. He is a founder of Youthistaan, People News Chronicle, Hitchhike TV, Branding Panther and many more.
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