Availing a home loan is a huge financial commitment. You must repay the amount in full within the tenure, or there is a risk of losing the ownership of property. Read on to know more about how insurance can help you repay the home loan in case of any untoward incident like death or disability.
If you have availed a home loan, you have the responsibility to repay the amount in full within the tenure. In case you fail to repay, due to sudden death or accident, the onus will fall on the family members to repay the loan. To avoid this situation, it is best advised that you take sufficient insurance cover to keep your family safe from the financial contingency.
Today, the home loan lenders in India insist that the borrower take a loan cover for the home. This is because the lenders want to make sure that they recover their money in case anything happens to the borrower that would render them incapable of repaying the loan. But, apart from home insurance cover, you should take sufficient personal insurance cover to mitigate all risks that may arise during the loan tenure.
Let us look at how insurance can help you repay the loan under various circumstances.
Situation – Sudden death
Solution – Invest in a term insurance plan
Buying a term insurance plan is one of the best ways to provide financial protection to your family members. Under the plan, the insurance company pays a death benefit in a lump sum to the nominee if the insured passes away before the end of the term. It is also one of the cheapest insurance plans in the market; you can buy a term plan with premium as low as 500 INR per month. If you have availed a home loan, a term insurance cover is a must-have. The benefit received by the family member can help them to pay off the loan and enjoy a debt-free and stress-free life.
Situation – loss of income due to critical illness
Solution – buy a critical illness plan or purchase an additional rider with the life plan
Often, people who avail home loan fail to repay the amount because of a sudden incident like getting involved in an accident or suffering from a life-threatening disease. Illness like paralysis and cancer not only leads to deterioration of health but also leads to loss of income due to your inability to work.
The cost of treatment for such illness can be huge, and it can have a severe impact on the family members; it can drain your savings. Apart from the treatment cost, if the family members have to take the responsibility of paying the home loan EMI, it could have a severe impact on their finance. To ease the burden on family members, you should invest in a health care insurance plan that provides coverage against critical illness. The insurance will cover your treatment expenses.
You can also consider buying an accidental cover or a critical illness insurance plan on a group platform. The insurance company will offer to pay the outstanding loan amount as per the conditions of the policy. Some insurance plans pay the sum assured in case the insured suffers from an untimely accidental death or an accident that leads to partial or total disability.
The benefits of having an insurance cover are many. Apart from helping the family pay off the home loan debts, it also gives you the peace of mind knowing that your family members will not have to bear the burden of debt even in your absence.