Buying a home is one of the highest points in the life of an average Indian but most Indian home buyers do not realize that the most-coveted asset comes to them at a huge price and is a huge long-term liability.
The worst time is when the home loan buyer, the breadwinner of the family, dies leaving the dependents shouldering with the debt burden. These are the times when home loan insurance comes into the picture.
From Economictimes.indiatimes.com:
If something happens to the borrower, especially if on the death of the breadwinner of the family, the dependents are left shouldering the burden of debt, in addition to grappling with the loss of the breadwinner’s income. A failure to repay the loan could mean having to deal with the threat of the bank repossessing the property, resulting in possible eviction — an eventuality one certainly wants to avoid.
Enter loan insurance covers, which are specifically designed to cover such risks. Home loan insurance, or mortgage covers, are similar to simple term plans, but unlike the latter, these policies offer a reducing sum assured; that is, the cover diminishes in congruence with the amount owed to the lending institution.
Home loan buyers can safeguard their future and lives of dependents by opting for home loan insurance policies that are usually single premium policies, which are to be repaid as part of the equated monthly installments (EMI).
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