PDA

View Full Version : Home loan: Beware the insurance agent



Master
24-01-2011, 01:48 PM
Why home loan insurance
Buying a home on a loan entails a liability of paying back the loan. In case of your unfortunate death during the pay term, you would not want your family to become homeless. A home loan insurance insures that the insurance company pays for the balance amount, should something happen, to you.

How does it work
Suppose you take a home loan insurance policy for Rs 25 lakh and in the next 5 years you pay about Rs 5 lakhs. Unfortunately, if something happens to you and your family is unable to repay rest of the 20 lakhs outstanding then the home loan lender is in full right to sell off your house and recover rest of the amount. However, if you have a home loan insurance policy, it will take care of your balance amount of Rs 20 lakhs that you need to repay. You can choose the coverage of a home insurance policy between a reducing balance or on a flat basis.

Choosing home loan insurer
It is not mandatory to take home loan insurance from the lender. However, many lenders get into a tie up with an insurance company and involve in an arm-twisting techniques to pressurise a borrower into taking a home loan insurance policy from them. Many banks like ICICI bank, SBI, HDFC bank etc have floated their life insurance companies. When you apply for a home loan to a bank branch the bank executives may try to push you to buy a home loan insurance policy from them saying that your application may get delayed or rejected if you do not take a home insurance policy from them. Always remember that “insurance is a matter of solicitation” and no company can force you to buy an insurance policy from one particular company.

Cost of the policy
The premium of a home insurance policy depends upon several factors including your age, the amount of home loan you seek, and the number of years you would take to repay the loan.
You have the option of choosing a single premium policy or the premium can be spread over few years. Some lenders include the premium payment with the EMI of the home loan. You must be very careful when the lenders increase your home loan eligibility and deduct the extra amount towards payment of premium of the home loan insurance policy.

Source - financialexpress.com

Expert
25-01-2011, 04:05 PM
Good points raised! Most of the banks pressurise the customer to buy insurance from there tie ups, otherwise they create problems. Common man wants his work to be done smoothly so stay silent.

oliviaskye
17-10-2011, 09:17 AM
yes, home loan insurance policy is best for those who want to buy new home but they don't have enough money then they can take the loan for their home with insurance. it's very nice topic for discussion.
thanks.