Month: August 2011

Home Loan Insurance a Boon or Bane?

A corporate employee who has taken a home loan of Rs. 50,00,000 by making his wife as co-applicant has not opted for home loan insurance in the view that he got enough coverage with different other banks and there is no need of any home loan linked insurance, but in a shocking incident after he passed away the other bank has rejected his claim with a reason of “ Non disclosure of medical facts” and the co-applicant has been made liable to make the loan payments who is a house wife.

What is Home Loan Insurance?

A home loan insurance is a product that banks have introduced to make the co-applicants who sign the documents along with applicants free from home loan liability if any risk occurs to the applicants. It has two categories

a) Home Loan Linked Life Insurance: It is the product in which banks insures the life of applicant for the loan amount and for the entire tenure. Banks will provide with the option of making insurance payment on behalf of the customer to the Insurance company and the same will be added to the Home Loan amount which can be paid in easy EMI’s. The premium is a one time premium and the coverage will be given for the entire tenure to the complete loan amount.

If any risks occurs to the applicant in the repayment period then the remaining outstanding amount will be paid by the Insurance company to the Banker and the loan will be pre-closed and the original documents will be handed over to the co-applicant making him/her free from liability.

Do‘s:

  • Please fill the Insurance application form with your own hands
  • Please provide complete details which the insurance company request for.
  • Provide complete details about your habits which might need some medical attention which in turn make the premium goes up but have coverage.
  • Provide documents of the Nominee to the Insurance company
  • Signature proof of nominee is also be provided.
  • Have a photocopy of filled in insurance application form for future records
  • Get a brochure of the details of Insurance that you opted for.

Don’t’s:

  • Don’t try to mis-guide by filling wrong information.
  • Don’t sign blank insurance application form.
  • Don’t be in a month-end closure hurry before taking insurance have enough time for it
  • Don’t sign the documents with-out complete details of Insurance policy

b) General Insurance: Banks do provide with an insurance product in which it will cover the property from natural calamities and fire accidents etc for which the bank will charge very less amount and which in turn will be funded by the bank and the amount is added back to home loan amount.

It is always suggested to the customers to make a choice of Home Loan Linked Life Insurance for the complete loan amount and for complete tenure as the policy demands for one time premium with complete tenure coverage and which has a great benefit of paying the premium in a very small EMI’s which is covered in the Home Loan EMI. So the Home Loan Linked insurance is definitely a Boon to customers who think of making co-applicants liability free by making this onetime payment.

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GiottoPress by Enrique Chavez