Generally the bank asks to buy a Single Premium Term Insurance plan with a home loan.
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Should you also buy insurance while taking home loan? |
However, the insurance cover should be taken, but in case of taking a loan, the customer can not be compelled for this. No bank or non-banking financial institution can compel them to do this.
Adil Shetty, the CEO of Bank Market.com, says that buying a Home Loan Protection Plan is not necessary. Neither the RBI nor the Insurance Regulatory Authority, Irda, has made a rule to buy it with a loan. The decision to buy or not buy an insurance plan with a loan depends solely on the customer. The loan taker can not be forced to buy the cover.
What do banks say to you?
Generally the bank asks you to buy a single premium term insurance plan to ensure the loan liability. To make this deal attractive, they attach this single premium to the loan. In this way, customers do not have to pay any advance payment. Despite this, their loan gets insured. As a result, the amount of IMI increases slightly.
How much does premiumॽ
Let's see if anyone wants cover for a loan of 30 lakh for 15 years, then how much is the premium to be paid in the term insurance plan. On an average 15 years old loan of 30 lakh rupees, the annual premium is Rs. 3,200. That is, in 15 years, you will pay 48 thousand rupees in premium. Ask the bank to share premium data. Compare this with other life insurance companies. Then take a decision.
Why should cover?
Home loan becomes a big liability. In the event of the death of the borrower, the responsibility of repaying the loan comes to the other members of the family. Having insurance cover does not burden others. The term insurance plan covers the risk completely. Due to being cheaper it seems most comfortable to most people.
What is the reduction?
By the way it does not increase IMM much. But, remember that you do not get any tax benefits on the premium you pay. At the same time, if you are taking a term insurance plan on your own, then you get Tax Benefit under section 80C.
Shetty points to another important thing. They told that if a single premium policy is added to your home loan, you will not be able to port the insurance plan upon switching the bank when necessary.
How will face of situation
It is possible that the bank refuses to give you the loan if the insurance cover is not taken. What will you do in that situation? Shetty says that if you are being forced to take home loan cover for home loan then you can tell from the bank that you know that this is not necessary. Request the bank to write that it is mandatory to take home loan cover for home loan.
If the bank is so strong and not willing to allocate the loan, it is better to talk to the bank's top officials about this.
What should you do?
If you already have a term insurance plan, then top up it with the amount equal to the home loan. Do not adjust the home loan's debtor with the existing cover. The reason is that this will compromise your family's needs.
In the ideal condition, the amount of income of a person should be ten times the size of it. So if you already have a term insurance plan of Rs 80 lakh and if the loan is worth 30 lakh rupees then take extra cover equal to the loan amount.