Is it a compulsion to get an insurance plan for a home loan?

Is it a compulsion to get an insurance plan for a home loan

It is not obligatory to obtain the insurance cover while taking a home loan. In case an executive from a financial institute is putting pressure on you to go for an insurance scheme for a home loan, then you can raise a complaint against that person to the customer care department. The concerned officials will definitely look into the matter and get it sorted.

In case the response you get is not helpful then you can reach the Reserve Bank of India (RBI) to get it all sorted. You can get it all managed through an application or an email on the RBIs official website.

But, in case you need to get the insurance plan for your home loan, then it is suggested for you to get a few essential details regarding the same.    

Home Loan Insurance scheme  

The home loan insurance scheme is normally termed as HLPP or home loan protection plan. Under this insurance plan, the insurance company shells out the remaining loan amount in the condition if the borrower passes away or suffers from disability because of some accident and is therefore unable to pay back the loan amount to the home loan company. In the case of term insurance schemes, the applicant is required to pay a certain percentage to get home loan insurance. 

Premium to be paid for the Home Loan insurance cover?  

In case the home loan companies put forward the applicant with an insurance plan for a home loan, this means that the Equated Monthly Installment amount will also include the cost to be paid for the insurance premium. The borrower could also look for the banks that are serving up the customers with a sole premium scheme for home loan insurance. If this would be the case, then the insurance premium charges will get adjusted to the funds.

Which Insurance Plan is better? 

As a home loan is generally offered for the tenure of around 20-30 years, there is no point in choosing a short-term insurance plan just for the reason that the premium amount will be reduced. Actually, the insurance plan should be there for the same duration as the loan.

What premium amount should be there?   

Preferably, the borrower should choose an insurance plan amount that matches up to the borrowed funds. It should also comprise the amount that the applicant’s family will need in case he dies before the term gets completed. Therefore, it is not suggested to go a home loan with low insurance cover just for a minor reason that the premium will be lesser. It is better to keep your family on a safer side and go for a home loan with a long-term insurance premium.  

Are you confused about the interest that you will be paying to the bank? If yes, then you can easily go online and check that through an EMI calculator online. All you have to do is just fill-up the required details and get the estimated amount to be paid as an EMI to the bank.

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