You Can Build and Protect Your Home Simultaneously

By: addi vardhaman
The growth in the housing loans in India has also accelerated the market for the Home insurance market. The need, popularity, and acceptability of these products are indeed quite high. This insurance policies help the borrower to reduce the risk factor on his shoulder.

It has now been made mandatory to avail insurance in India along with loan to purchase a new home. It takes only a small premium to give the much-needed financial cover, emotional security and peace of mind during the repayment tenure.

On the unexpected demise of the borrower of the home loan, the burden of repayment of loan amount falls on the surviving members of the family. In that unfortunate situation, the outstanding loan amount of a home loan is paid by insurance cover. The insurance coverage which is availed by the borrower through small premium helps like a godsend boon.

The concerned insurance company repays the home loan amount and prevents the bank/HFC from taking over the underlying house to recover the dues.

This type of insurance is meant for borrowers who have no alternate source of money to raise capital. Nowadays, most of the banks/HFCs are complemented by an insurance arm - directly or through an associate company - to offer the insurance product along with the home loan.

There is a nominal fee attached with these insurance policies and in some cases it may be free. This insurance can be bought only for the building (structure) of your home, or only the contents (belongings) or both. The policy covers the losses to the structure and contents of your house due to any natural and man made calamities. The indicative list of calamities covered are fire, riot, strike & malicious damage, explosion & implosion, earthquake, lightning, storm, cyclone, tornado, hurricane, flood & inundation and damage due to impact by vehicles.

The premiums are not high as the policy is a term insurance product. The borrower may opt for the product from the market at a low cost independently. As the loan amount increases the payback amounts also increases . The repayment of the loan is generally made through equated monthly installments (EMIs). EMIs also increase with the increase in loan amount. so, if the borrower is looking for a higher loan amount, he should keep in mind that the risk factor is more. He should reduce the involved risks by going for a home loan insurance policy.

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