Why you must take a home loan insurance?

Insurance

oi-Sunil

By Sunil Fernandes

Published: Tuesday, April 9, 2013, 8:41 [IST]

If you are the only earning member of the family and have taken a home loan and God forbid any eventuality happens, chances are you could lose your home, as the home loan company would ask the successor to pay off the home loan.

It's best to insure your home loan, so the insurance company steps in and pays the loan, securing your dependents and your mortgaged house.

A home loan insurance covers the balance of the home loan to be paid in case there is a death of the person taking the home loan. Housing finance companies and banks always coerce applicants taking a home loan to get an insurance cover because it acts as a surety. They may bundle it with the loan amount. Also read tips to remember before taking a home loan

But remember that the home loan insurance will only cover your home loan. This means that your family can be in a mess, even if they own the home, after the loan company pays off your home loan. Hence, it's important to also take a term insurance in case you do not have one.

But, many analysts argue that in place of a home insurance, you could directly take a higher term insurance and cover the home loan in case of any eventuality. That is also a fair argument.

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