We all wish to have our own home, but this requires a lot of planning and discipline to make the dream a reality. One such way to fulfill the dream is to have a home loan but it comes with an added responsibility. One has to be more cautious about their expenditure and ensure that the loan is paid off without default. Also, there is a risk if the home loan owner falls sick or dies in an unfortunate event.
In such a situation the family may have to give up the home to pay off the loan. To refrain such an event one can choose to have term insurance that would help to pay off the loan in the absence of the home loan owner. Although purchasing a term insurance plan for securing your home loan isn’t mandatory, having one would safeguard your family from any financial crisis in the future.
Ideally, if you are planning to have a home loan and also term insurance, you should invest in a way so that the insured sum is 10 times when you add the annual income plus the total loan to be paid.
Here is how term plan can help you hedge from such situations in future:
One Can Easily Afford Term Insurance Plan:
While availing a home loan, the home loan giver may insist you to take a term loan to protect the home loan. The insurance companies settles the remaining loan amount in case of the demise of the loan owner. Availing a term plan for home loan is not mandatory and one can easily choose to have a term insurance plan instead. Furthermore, there are various plans available online and one can easily compare and choose an affordable plan.
Easy Change Of Lenders With A Term Plan:
If you choose to have a term plan for home loans, you can easily switch your lender for home loans along with your insurance. Also you can continue paying premiums even after you have completed paying your home loans and secure the financial future of your loved ones.
Other Benefits of Term plans:
The biggest advantage of having a term insurance plan for home loan is that the nominee is entitled to receive the complete amount at any time of the claim. The nominee can retain the remaining amount after paying off the outstanding loan.
The term insurance amount isn’t just fixed to solely recovering the home loan. The assured sum remains constant and the family can easily use the remaining amount in settling other financial requirements of the house.
In case of home loan protection amount the insurance amount reduces as and when the loan gets repaid. So while making a claim the nominee only receives the outstanding loan amount.
At times banks also provide the lenders with a Term insurance plan, but this is relatively high as the banks have to purchase the policy from insurance providers. Thus, the insurance provided by the banks attracts a higher cost compared to when it is purchased from the insurance providers directly. Therefore it is always advisable to get a term insurance plan from the insurance providers itself.