Mr. Naved Khan took a Home Loan from the bank and bought a new house and shifted there with his family. A new house with all the amenities was a dream of Naved, but now he has a burden of repaying EMIs every month. With a limited salary package, he is bound to pay the loan until the tenor gets over. The next thing that comes in his mind are the dire consequences that his family might have to face if he passes away. The thought scares Naved Thus, he researches and gets to know about insuring his Home Loan. NBFCs and various lenders provide insurance protection for Home Loans. You can opt for insurance protection from the same lender, from whom you took the loan.
So to know more about insurance protection on Home Loans, the following are the points:
Home Loan insurance and its working strategy:
Home Loan insurance is just like another insurance plan, where all the risks are covered against your premium. The risk can be the uncertain death of the borrower or disability to work. In short, if something happens to you in the future, before repaying all the loans, the insurance company will take care of the remaining loan and your family will be able to live without the burden of paying the debts.
The Home Loan insurance policy works on the concept of reducing cover. That means if you take Home Loan of INR 30 lakh, then the insurance company will give you insurance on 30 lakh for the first year. After completion of the first year, you will have to pay the remaining amount of say INR 26 lakh, then the insurance company will give you insurance on the remaining amount i.e. 26 lakh.
Factors you must consider before you opt for a Home Loan insurance:
- Age: Generally, a borrower is allowed to take a Home Loan up to the age of 60 years.
- Health conditions: Every insurance company has different policies to deal with health check-ups. The companies make it compulsory after given time period or if the loan amount is higher.
- Requirement of official certificates: To take the insurance facility, one of the family members will have to submit the death certificate of the deceased person to the company and a medical certificate in case of permanent disability.
- Suicidal deaths are not allowed for taking insurance: The insurance companies will not allow the deceased person’s family any help if the person died wilfully. Before going to any bank or NBFC, do check all the terms and conditions once.
So, keep in mind all the above points before approaching an insurance company. Please check all the necessary documents and then opt for the policy.
Factors determining premium:
Premium is a risk over every price that has been given. Insurance companies always ensure that they are getting the premium for securing the loan of the person. The premium amount depends upon the factors like tenor, amount of loan, age, health conditions etc.
Home Loan eligibility calculator:
Before taking a Home Loan, you will need to pass the eligibility criteria. How much loan you need and how much funds the lender can provide you, all this can be done with the help of Home Loan eligibility calculator. The eligibility calculator includes your age, the amount you need for the loan, tenor to repay the loan, your monthly salary, interest on the loan and other loans if you have taken any.