2 MinsApr 03, 2023
Most of us dream of owning a home someday. But it requires careful planning and allocation of one’s finances. This is where a home loan is useful. By availing of a home loan you can buy your dream abode today, and repay in affordable instalments over time. While it is not mandatory to opt for Home Loan Insurance with a home loan, it is advisable to take it. A home loan insurance cover offers peace of mind to you and your family in case of any unexpected emergency which may impact your ability to repay your home loan. Below we have discussed four reasons why you must have this insurance coverage.
1. Protects your family:
In the case of the death of the breadwinner of the family, i.e. the one who is repaying the home loan, the onus of repaying the home loan falls on the family. If the family cannot repay the loan, the lender acquires the house and auctions it. Thus, along with the emotional distress of losing a loved one, the family might end up losing the roof over their heads too. Home loan insurance will come in handy in such a situation. The arrangement of home loan insurance is such that the insurer pays the outstanding loan to the lender. Thus, saving the family from trouble.
2. Protection of assets and collateral:
In case of the death of the loan bearer, the assets i.e. savings and investments, and other valuables can be seized to repay the outstanding amount of the loan. Therefore, even if the family somehow manages to save the house, they might have to part with their other assets or valuables. In such a case, home loan insurance helps by paying the outstanding amount of the loan. Hence, even if the borrower expires, the insurance ensures that it is not at the cost of the standard of living of surviving family members.
3. Easy to pay the premium:
Home loan insurance comes in the form of term insurance with the sum assured tied to the outstanding loan amount. Hence, the premium is generally affordable. However, if the borrower finds the premium unaffordable, the amount of the premium can be added to the loan amount. It can be repaid in easy instalments.
Also Read: [Home Loan and Mortgage Loans - What's the difference?]
4. Tax benefits:
You can avail of the tax benefits under Section 80C of the Income Tax Act.
5. Peace of mind:
The biggest benefit of home loan insurance is you can have peace of mind as you can stay content in the knowledge that if something happens to you, your family would not have to bear the weight of the heavy liability. They will be able to retain the home without compromising on their other expenses.
Most lenders offer a home loan insurance policy along with the home loan. The sum assured will depend on your home loan amount and tenure and your age. Your lender may also have a tie-up with a life insurance company, which may make it easier for you to buy home loan insurance when availing of your home loan. Check it out, before you finalize your home loan.
Conclusion
If you are taking a loan from Axis Bank, it offers you a wide range of options for your home loan protection. Your lender will give you options, but it is not mandatory to buy home loan insurance from the lender. You may select home loan insurance from a different provider as well. Whether you buy the policy offered along with the home loan or buy it from another provider, the bottom line is that if you have a home loan then it is advisable to have home loan insurance coverage.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
