The primary aim of insurance is risk management that helps you and your dependents financially for a minimal fee. Therefore, it is obvious enough that having insurance in place is a must, and specifically life and health insurance. However, before getting one, we first need to understand the adequate requirement of insurance. We cannot just go with what the insurance company tells through its promotion campaigns. And this is true of home loan insurance too.
Defining Home Loan Insurance
As we all know, taking a home loan is quite a long-term commitment. In fact, home loans can stretch up to almost 25-30 years or even more than that. Life is something that doesn’t come with any guarantee cards. So, what if under unforeseen circumstances the one who has the responsibility of paying the equated monthly instalments (EMIs) dies? The entire burden of paying the loan would then fall on the head of his or her financial dependents, and in most cases, they would be immediate family members such as spouse or children.
Therefore, if the loan is not repaid or the EMIs are not paid regularly, the house, which itself is collateral, might get seized. Hence, in such situations you need to be prepared well in advance and protect your family and loved ones financially. And this is possible by either having a term life plan or home loan insurance. Home loan insurance is nothing but a form of life insurance wherein if the insured passes away the home loan that he or she availed of can be cleared with the insurance claim amount.
Functional Aspects
This story is from the April 26, 2021 edition of Dalal Street Investment Journal.
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This story is from the April 26, 2021 edition of Dalal Street Investment Journal.
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