It is beneficial to obtain insurance on a home loan in India, but it is not compulsory. Most lenders compel their borrowers to get home loan insurance and make them pay extra for this. However, this is not true.
What Is Home Loan Insurance?
A home loan insurance plan is a scheme under which the insurer will settle the outstanding home loan amount with the lender or the bank in case of an unanticipated situation. Some of the all-inclusive home loan insurance plans provide cover for the applicant, the home, and all its belongings. The premium that is paid towards home loan insurance will come under tax cover.
When will a home loan insurance policy lapse?
A home loan insurance policy could lapse when
- The loan is repaid in full
- After the demise of the borrower
- On the transfer of a loan to another bank
What Are The Benefits Of A Home Loan Insurance To Lenders?
Lenders do not want their loans to become bad debts. To prevent this, they require home loan insurance. If the borrower dies during the tenure of a loan, then it will greatly affect the lender if he was the only earning member in the family.
What Are The Benefits Of A Home Loan Insurance To Borrowers?
Home loan insurance is good for borrowers because it makes sure that the dependents of the borrower do not become homeless upon the borrower’s demise or in case of a financial crisis.