Safeguard your home loan with a home loan protection plan

 As the inflation keeps rising and properties keep getting costlier, it is becoming more and more difficult to buy a home from one’s savings. The only option left to a lot of people is to go for a home loan in Delhi and other metro cities of the country. However, even if you get a home loan easily and even if that loan is satisfying your needs, you might get in trouble in the future. If, in the future, any unforeseen disaster such as death, disability or job loss occurs, then you can get into certain financial trouble.  Therefore, to safeguard themselves from such uncertainties in life, people go for a home loan protection plan (HLPP), which is the insurance for your home loan.

What Is a Home Loan Protection Plan?

A home loan protection plan is an insurance plan that provides cover to your home as well as the home loan. In case of an untimely death of the borrower, or a disability that makes it impossible for him to work, the policy provider settles the outstanding loan amount with the bank. 

If you go on to buy a home loan protection plan, you will ensure that if any unprecedented disaster does befall you, then at least your loved ones would be free of the liability of paying the EMIs of the outstanding loan. However, in India, buying a home loan insurance has not been made mandatory yet by the RBI. This is why a lot of people tend to not take the home loan insurance, even though it is quite beneficial to do so. Let us take a look at some of the features of HLPP to understand its importance.

1.       A home loan insurance policy is a decreasing Term Insurance Policy.

2.       Usually, the home loan protection plans give cover only in case of the death of the borrower. There are only a few home loan protection plans that offer cover in case of a job loss regardless of whether you’ve taken a low interest home loan against collateral or an unsecured home loan. So, research properly before choosing a plan.

3.       Most of the home loan protection plans involve one-time premium payment. However, you can negotiate with the vendor and club the premium with the EMIs for the home loan.

4.       As the time passes on, the sum assured keeps decreasing.

5.       You must remember that there isn’t any maturity benefit in the home loan protection plan.

If it so occurs that the borrower passes away, then the insurance provider will settle outstanding loan amount with the bank and the policy will be terminated.