The large
demand for the home loans has forced the market or loan providers to provide
Home insurance cover to customers who are availing the home loan. The
requirement, acceptability and popularity of this product are quite high among
the consumers. It is so, because the insurance cover reduces the risk of the
customer, in case of any uncertainty happen with the customer, the burden of loan
repayment does not come on the dependents of the customer.
Having
home loan with home insurance cover
is mandatory in India. The person should take insurance cover, as the customer
has to pay a small premium, but it covers the entire amount of the loan. It
also provides peace of mind and emotional security to the customer that, in
case uncertainty, the insurance company will take care of the outstanding loan
amount.
The
uncertainty could be anything; the demise of the borrower, accident of the
borrower, job loss of the customer, permanent disability of the customer, etc.
In this situation, the home
insurance cover plays the vital role, as the insurance company pays the
outstanding balance and the burden does not come on the dependents of the
customer. The small premium act; like a boon, in that situation.
The
insurance company repays the housing loan amount and stops the banks or
financial institutions to take hold of the property for recovery of their loan
amount. Now days, most of the banks or financial institutions or housing
finance companies have direct tie up with insurance companies, so that to
provide a facility to the customer for attracting the customers.
The person
can pay the premium of the home insurance cover at one go or the time of
repayment of the loan, i.e. through EMI. The premium will attract interest; if
it is linked with the EMI amount. Therefore, customer should try to pay it off
earlier only, as the premium is not too high. This is because it is a term insurance
policy. If the loan amount is higher the premium is also higher, and vice-versa,
this is because with the higher loan amount the risk is higher. This is so,
because it also increases the EMI amount with it which puts the burden on
customer monthly budget, therefore; risk of default is high in higher loan
amount.
