It is important to protect your family’s interests in the asset by obtaining home loan insurance. Which is better: Term insurance or home loan policy? Find out more now!
Most of us have a goal in life to buy a house. Millions of Indians can now realise their dream of owning a home thanks to the availability of digital mortgage plans. It is crucial to create the best EMI plan to ensure stress-free repayments. Mortgage tenures can range between 20 and 30 years. It is also important to prepare for the unexpected in case something happens before the loan is paid off.
A term plan and a home loan protection plan will protect your interest and that of your family in the asset.
Should you choose a policy to cover your home loan or a simple term insurance? Here’s a quick guide to the features and benefits of both home loan insurance and term insurance policies to help you decide.
The scope of coverage
Both policies offer financial assistance. However, the home loan insurance policy only covers the liability owed on the property. A term plan, on the other hand, can cover a variety of family needs.
Sum assured
Home insurance plans are valued at the amount of the home loan. With a term policy, the policyholder can choose a plan that will help them meet all their obligations and achieve other goals in life such as funding the children’s education.
Does the GST impact home loans?
Joint home loan tax benefits
Beneficiary
The mortgage agency is the primary beneficiary of home loan insurance. The lender receives the amount owed if the borrower cannot repay the loan due to disability, loss of income or premature death. The beneficiary of a term insurance plan is usually your nominee, which can be a child, spouse or parent.
Tenure
The duration of a loan protection policy is equal to the term of the loan. The tenure of the insurance ends once the loan has been repaid. You can choose a term plan for the duration of your choosing, up to the age when you will have debts and/or responsibilities to repay.
What is your best choice?
After considering all of the factors, decide whether you want a term insurance plan or a home loan cover. You may not be able to get another term plan if you have already purchased one for your family.
If you are able to pay for the premiums for a policy that covers your home loan, as well as other goals or needs of the family, then you can avoid having multiple policies and use the one you already have.
IDFC FIRST Bank offers a bespoke advisory to help you find the best life insurance solution. You can get expert advice or a rough estimate using the term insurance calculator. IDFC FIRST Bank has a range of term plans with affordable premiums and higher sums insured. Whole life coverage is available up to age 99. Tax benefits are also offered on premiums under Section 80C.
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