- from one provider to another without any effect on your home loan.
- As long as you pay your premium, your insurance cover will remain consistent even if you foreclose your home loan.
2. Separate home insurance
Separate home insurance is a protection plan that only covers the outstanding debt towards a home loan in case the borrower is unable to pay it.
Structure of home loan protection plan
The structure of a home loan protection plan is very similar to regular term insurance. The following mode of payment is available in protection plans.
- EMI: These payments are to be made every month throughout the tenure of the home loan. The premium of the home loan is also added to the EMIs of the protection plan and paid as one.
- Single premium: In this, a single premium is paid. The premium depends on the amount of home loan taken.
- Limited pay: In this option, the premium for home loan insurance can only be paid for a limited duration.
Benefits of a home loan protection plan
Home loan protection plans have several benefits other than simply covering the outstanding debt. Some of their benefits are given below:
- In case of the borrower’s demise, the outstanding amount of the home loan is by the insurer to the bank.
- Tax benefits can be availed on home loan protection plans under Section 80C of the Income Tax Act.
- There are options for add-ons to increase cover. For example, a clause for disability will ensure that the insurer will pay the outstanding during critical illness or disability and not only in case of demise.
A home loan is a long-term liability and can last anywhere between 25 to 30 years. There are no guarantees in life and the loans can last for decades. While it is not always mandatory, it is a very good method of protecting your interest. An insurance buyer must remember to conduct proper research before coming to a choice. Be sure to buy a policy that best meets your needs.
Before you start, go to HomeCapital and check your eligibility for the down payment assistance program. Through this program, you would need to arrange for only half of the required capital for your down payment. With no hidden charges, flexible tenure, and payment of possession, you can rest easy.