Article

Loan Insurance
November 27 , 2012

Long tenure loans are the largest liabilities individuals take on and an insurance cover on loan could go a long way in securing peaceful life for self and dependents if an unexpected event ruins repayment capacity. Loan insurance as a concept has yet to catch up in the Indian insurance industry. Presently loan insurance policies are available for home loans.

Home loans are the longest tenure loans. Some are bound by it for decades. If the borrower were incapacitated to make repayments due to a disability, illness or loss of employment his dependents would be in no small trouble. The loans have decreasing sum assured feature.

Home loan insurance products are being offered by ICICI Prudential Life, HDFC Life and LIC. Of these HFDC's Home Loan Protection Plan and LIC's Mortgage Redemption Assurance are just like any other term insurance policies. They pay off outstanding loan amount in case of death during loan term. The only difference is that the sum assured is paid to the lender and premiums work out to be more expensive than on a plain vanilla term insurance policy. ICICI Pru Home Assure policy offers non-medical limits for customers of ICICI Bank apart from death benefit.

For lack of good policies with features taking care of all the actual risks involved, if you have taken on a loan, just buy an appropriate term insurance cover taking into account all your liabilities, instead of buying home loan insurance policies which after all only duplicate term covers but at a higher price.

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