Don’t Only Insure Your Life, Ensure Your Home Loan Too!

Buying a house is a big deal today; simply because of the high expenses one has to incur while buying it. It can be overwhelming in many cases, because you will have to literally pull out all your savings to get it. These days a lot of funding burden has been reduced—thanks to the home loans. The lenders also offer you an insurance policy to cover your home loan in case something happens to your life. You have the choice to choose any insurance policy from any company and can say no the bundled offer which in most cases will be from a group company and might come to you at a higher premium.

When UR Sinha, a Pune-based techie bought his house, he took a loan from a leading bank; he also bought an insurance policy that was offered at the time of signing the loan documents. What he did not realize was that the insurance tenure was for five years and where as his loan was for 20 years.

“I did not even think of securing my life until they offered this insurance. It came at the last minute, so I did not think twice. I bought it anyways. Later, I got to know the details and features of competing insurance products were much better. I wish I had done some study before I paid the premium,” he said.

So, what are the terms and conditions you should look for in such policies? Here is a list of features that are available:
· Cover: Ensure that the term covers the entire loan value. Some of them cover applicant and the co-applicant. Choose what suits you the best.
· Tenure: It always makes sense to buy a term insurance that covers entire life span of the loan
· Premium: Enquire with all the insurance providers. Do not fall for the marketing gimmick of your lender who is trying to cross-sell a product. You might find a competitor offering you similar terms for lesser amount.
· Unemployment benefits: Some of these insurance policies also offer certain benefits in case of a job loss. They pay your EMI if you have been retrenched in your company. But please note that this is for a few months only and you have to provide a proof of being asked to leave along with the reason. So, if you have a job, which is prone to downsizing, it is a good idea to consider this kind of a policy.
· Critical care benefits: Some policies also cover your home loan if you end up being in an accident and are bed ridden for life. In such cases the loan outstanding will be waived off. The premium might be a little higher, but the benefits are proportional.
· Covering the house: Most policies also cover your house and some of them give you additional benefit of covering the contents in your house. But the cover is subject to certain terms and conditions. So, make sure you know what you are paying for.

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About the author: Rajiv Raj is the director and co-founder of www.creditvidya.com.