Home Loan Insurance: If you have bought a house then you can take advantage of home loan insurance. Let’s know what is the benefit of this?
Building or buying a dream home is one of the biggest investments. Investing in it gives long term profit. Also, if you are buying a house on a home loan, then you will have to pay monthly EMI for it.
You know that there are many such banks which provide the facility of home loan insurance along with the facility of home loan. This home loan insurance (Home Loan Protection) provides protection. Under this benefit, if something happens to the borrower, then his family does not have to pay the outstanding loan.
The Reserve Bank of India (RBI) and IRDA do not have any guidelines regarding home loan insurance and it is not necessary to take it. However, banks and financial institutions provide home insurance to home buyers.
What is Home Loan Insurance?
Home loan insurance or home loan protection plan is a protection plan for home loan. Most banks offer home loan insurance along with the home loan when you borrow to buy your home. Under this insurance policy, the home loan amount along with the lender banks, NBFCs or housing finance companies are paid in case of death of the borrower.
Benefits of Home Loan Insurance
If a customer wants to buy home loan insurance, he can deposit the insurance premium in lump sum or in monthly installments along with the home loan EMI. The monthly installment of home loan insurance will also be deducted along with the home loan EMI.
Protects your family
If ever the home loan borrower passes away, his family pays the remaining EMI to the bank. However, if the family is unable to repay the loan, they are asked to vacate the house. Home loan insurance takes care of this problem. Once the borrower opts for home loan insurance, then even after his death, his family is not forced to vacate their home due to non-payment of home loan or outstanding loan.
Protects the asset and other collateral
In case of death of the home loan borrower, the home under consideration and other valuable assets can be confiscated by the lender to repay the outstanding loan amount. In some cases, even if the family members manage to save the house, their house gets confiscated. In this case, home loan insurance can be used to repay the outstanding loan amount.
Get tax rebate
Those paying for home loan insurance can avail tax deduction under section 80C of the Income Tax Act 1961 on the premium being paid for home loan protection cover.
