Insurance cover for Home Loan
Vinodji: Hello Sharmaji, I am so happy that you finally visited my home.
Sharmaji : Hello Vinodji. I had to; you invited me so many times.
Vinodji: True! So, what brings you here?
Sharmaji : I have now bought a home of my own with the help of a Home Loan. But I am worried, whether my family will be able to repay the Home Loan in case something happens to me.
Vinodji: Why don’t you take an Insurance Policy linked to your Home Loan to safeguard and protect your family?
Sharmaji : How does it work?
Vinodji: Life Insurance Policy linked to Home Loan are arranged by the Housing Finance Companies/ Home Loan Lenders in partnership with insurance companies which covers you with the risk of death and ensures that the insurance company pays off the entire outstanding Home Loan amount to the loan provider/ financer, in case something happens to you. Such insurance covers are commonly known as MRTA (Mortgage Reducing Term Assurance). Thus, your family is protected from the burden of repaying the Home Loan outstanding amount and your family will retain the home.
Sharmaji : I see. How is the Life Insurance Policy linked to Home Loan calculated?.
Vinodji: The sum insured is linked to your Home Loan amount and the amount of insurance premium payable to the insurance company depends on:
- Applicant’s Age
- Home Loan Amount
- Tenure of the Home Loan
- Applicant’s Medical History
Sharmaji : How to buy an Insurance Policy linked to Home Loan?
Vinodji: Generally, the Housing Finance Companies/ Home Loan lender will recommend an Insurance Policy as per your requirement which is bundled along with the Home Loan that you seek. In case you opt for a bundled product the premium amount is funded by the Housing Finance Companies/ Home Loan Lenders. Alternatively, you can search the market for a suitable Insurance Policy. You must check if the policy will cover the death benefit, death by accident, permanent disability benefit, etc. This will safeguard your family from loan burden of any repayment challenges in the future.
Sharmaji : Thank you Vinodji for your guidance on Life Insurance Policy linked to Home Loan. (Relaxed!!)