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Thread: Home loan: Beware the insurance agent

  1. #1
    PW Stalwart Master's Avatar
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    Angry Home loan: Beware the insurance agent

    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



  2. #2
    Moderator Expert's Avatar
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    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.
    * SAFE
    Self Appointed Financial Expert

  3. #3
    PolicyWala NewBie
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    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.

  4. #4
    PW Fan
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    Great information. Many will get fooled with the insurance agents. So these points you provided are very useful


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