Do we need to buyHome loan insurance if already having a term insurance
I already have a term insurance of 1crore. Now I'm about to avail a home loan of 60 lacs for 30yrs tenure. Is it advisable to buy a home loan insurance or will term insurance suffice?
If you have sufficient cover which shall take care of finances including liabilities in your absence then it isn't required. But most of the lenders insist to protect the loan they lend you. This product has reducing sum insured and premium payment is generally one time which is sanctioned including your loan for house.
A standard pure term life insurance, the sum insured remains constant and it is paid to the family in case of death of the policyholder.
Whereas in a loan protection plan, the sum insured keep on decreases as the outstanding loan amount decreases. The insurance company charges a single premium based on term of the loan and loan amount. Point here is most of the loans are paid before the loan term, but once loan is paid, your insurance covers lapses (but you have paid for the whole loan term). Also in case you sell your property, you have to close the loan and life cover goes to zero.
in my opinion, taking a pure term insurance and assigning it to the lender is a much prudent strategy.
but the sales guy will try to sell you a LOAN SURAKSHA KAVACHA to achieve his targets.
Hi, both term insurance and home loan insurance are different products. Term insurance provides protection to immediate families in adverse events, however home loan insurance provides essentially cover of the outstanding loan with the bank and can be useful in events if natural calamities like earthquake, fire etc. As such a separate home loan insurance protects an individual form these liabilities, specially this policy becomes useful if there is life lost and there is a meaningful damage in the property.
Take your decision accordingly
If you have adequate term life insurance that will fulfill all your liabilities than you need not to take loan suraksha kavach. Rather than buying loan suraksha kavach, you should take Fire Insurance for your newly purchased home.
Technically one must have separate home loan insurance cover as the liability increased with fresh loan which might not be considered at the time of taking or calculating term insurance cover initially. If loan amount is repaid with the help of u r initial term plan claim money then obviously the left over amount will not be able to serve the basic purpose of term insurance cover.to the next of kin or financial dependent of insured person. So its advisable to have proper insurance cover with changing higher liability with time.
No, as long you have sufficient life insurance, the bank cannot pressurize into purchasing another insurance. They are looking to only safeguard their interest. The policy sold by the bank could also be a single premium policy wherein the premium could be inbuilt into your EMI. It could also be very expensive, as compared to a stand alone term insurance policy.
Buying a term life insurance is an important part of financial planning. It is always recommended that one should have sufficient cover to take care of all the liabilities and future financial goals. In your situation it would be better to go for a suitable term cover over and above the existing cover (at least to the tune of your home loan amount i.e 60 lacs).
Your existing cover of 1 crore should be considered as safety net for your other financial goals or liability in case of any eventuality.
Now coming to home loan protection plan (HLLP), the bank would push for HLLP for varying reasons like their added benefits (in the form of commission) and as a surety for the loan repayment. The premium for the loan protection plan is generally a single premium and is added to the existing home loan EMI for the tenure of the loan. Also keep in mind that the cover under the home protection plan is reducing as it would cover only the outstanding loan.
If you would do a cost benefit analysis considering the additional EMI per month paid for the HLLP and the premium paid for term cover, the term cover option would be better placed (subject to your current age and insurance amount) as it would be most likely cheaper and would give you full cover instead of the reduced cover (HLLP) if any eventuality happens during the tenure of the loan.
Just remember that it is not mandatory to take any home loan protection plan.
If you have Adequate term insurance which will coverup all your liabilities than no need to go for loan suraksha kavach.
It has a Higher premium and also cover get reduced as you pay the EMI's.
You should go for Fire Insurnce of your home which will be helpful in case of any unforseen event.
You can take Bharat Griha Raksha Policy which you can take for longer tenure like 10 Years. Here suminsured for your house will get increased by 10% Every year. Also you can cover your contents too.