Everything you need to know about home loan insurance

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Summary

Nowadays, home loan insurance is gaining popularity as banks and financial institutions have started pitching home loans with their home loan protection plans.

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Nowadays, home loan insurance is gaining popularity as banks and financial institutions have started pitching home loans with their home loan protection plans. But have you ever wondered why these home loan insurance policies are required? If not, here is a comprehensive guide to everything from what home loan insurance is to how to get it and reap its benefits. We bring you the answers to the top 5 most frequently asked questions that can help you decide if you should buy a home loan insurance plan with your home loan.

What is home loan insurance?

Home loan insurance or home loan protection is like term insurance that guarantees your home loan repayment even in unforeseen circumstances, including the demise of the home loan EMI payee. It compensates for your home loan in your absence and saves your assets from getting seized by the bank, thereby ensuring repayment of your home loan EMIs. Some banks and financial institutions have also mandated to buy home loan insurance with each home loan they purchase. However, there is no directive to buy a home with its insurance, while it is always advisable to purchase a home loan insurance policy with a home loan. It is important to note that the loan protection plan remains active until your outstanding home loan amount is repaid.

Why is home loan insurance important to buyers as well as lenders?

Home loan insurance is a dual-profitable policy that helps buyers repay their home loan in any circumstance, saving lenders from bearing any losses. It ensures the lender a guaranteed repayment of the home loan. The purchase of a loan protection plan is uncommon, while it is advised to purchase a home loan insurance policy along with your home loan to safeguard your family and precious assets.

How to avail of home loan insurance?

Home loan insurance is usually purchased while securing a home loan from a bank or other financial institution. Many sell it as a package combining both a home loan and a loan protection plan.

How does home loan insurance work?

The home loan insurance works in tandem with the home loan. It comes to your rescue when you are in a critical situation, such as losing your job or the demise of the house loan payee. This loan protection plan makes sure that you repay the home loan and get all your assets and collateral handed over by the bank or financial institution.