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Protect your family from home loan troubles


Your home loan can become a liability on your family members if you are absent in the future. Home loan insurance literally saves the home against future financial insecurity.

One of the biggest dreams on any person’s bucket list is to own a house. A house that shelters them from the outside world, that becomes their private sanctuary. The home remains with you through life’s ups and downs, giving you endless hours of happiness and enjoyment with your loved ones.

In more prosaic ways, an owned property is an excellent addition to one’s financial portfolio. Real estate normally appreciates in India, so the house you buy today will most certainly increase in value tomorrow.

But buying a home is not an easy task. The price of real estate has shot up considerably all over the country in the last decade. Buying a first home is out of the reach of most Indians. Only those who finally decide to take the plunge with the help of a home loan are able to make the purchase. Even then, many loan borrowers struggle to juggle their finances once the regular EMI schedule begins.

By and large, a home loan makes the house purchase dream a reality. But there is an important factor to consider, which most home buyers do not: What happens to the home if the loan borrower is absent in the future?

Leaving behind liabilities…

Life is so full of unexpected twists and turns, that one cannot afford to get complacent about any aspect of your existence. It is quite possible, as dire as it sounds, that you might be abruptly absent in the future. You may have borrowed a home loan to buy your dream house, and you may be in the middle of the loan repayment. You might be the primary applicant for the loan and your family’s sole breadwinner.

If you were to be absent in the future, even as the home loan was only partly repaid, the consequences would be disastrous to your family. In the absence of a backup plan to repay the remainder of the loan, the lending institution would be forced to evict your family members and attach the property. Attaching the property and auctioning it is done to recover the balance dues.

If you are terrified of leaving your near and dear ones in the lurch owing to the unpaid home loan, you can set your mind at rest with home loan insurance.

What is home loan insurance?

A home loan insurance plan is a policy that covers the loan borrower’s family against the balance loan amount not yet paid back to the housing finance company. It is purchased at the time of taking the home loan, and is often sold by the lending institution in partnership with a good insurance company.

The home loan insurance comes into effect in the case of the unfortunate demise of the loan borrower. The sum assured of the policy is passed on to the surviving family members so that they may repay the home loan from the money.

What you need to know about home loan insurance

  • The plan may be available with some degree of customisation. Some plans also include critical illness cover.
  • They are usually single premium plans, though others might have annual premiums.
  • It may not be possible to transfer the home loan insurance policy to another lender, in case you transfer your home loan.
  • It is better to discuss with the housing finance company about the kind of coverage you might need under home loan insurance.

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