Loan Insurance, also known as Loan Protection Insurance, is a product designed specifically to cover your monthly loan payouts in case of temporary/permanent disability, loss of job, or any such eventuality. It protects the borrower from defaulting on loans.
Likewise, people ask, can you cancel loan protection insurance?
If you buy a mortgage protection insurance policy, you’ll continue to make monthly premium payments for the duration of the policy term. Your insurance company can cancel your benefits if you stop making your premium payments. Like most other types of insurance, you’re free to cancel at any time.
Additionally, is insurance mandatory for home loan HDFC?
No, it is not mandatory to buy home insurance with a home loan. But it has become a common practice for banks to insist on this policy to secure their collateral. Banks may also require that you get their name endorsed in the policy as a financier.
Is it good to take insurance on home loan?
Insuring your home loan with an insurance plan is a must. As the home loan amount is typically in several lakhs, it is essential to get a cover so that the liability of repaying it does not fall upon the family members in the case of death of the borrower.
It is not mandatory to buy a home insurance policy from a bank in order to get a loan. Contrary to the bank’s claims, there is no compulsion by the Reserve Bank of India (RBI) or the Insurance Regulatory and Development Authority (IRDA) for home loan applicants to buy any kind of insurance from the bank.
Car loans do not cover the insurance or registration fees that you have to pay at the time of buying the vehicle. Car insurance, which is mandatory, needs to be purchased separately and all vehicle registration-related costs also have to be borne by you as they are not covered by your car loan.
Home loan insurance is not compulsory while availing home loan. However, as a means of securing your finances and assets, an insurance of this nature becomes important. As a buyer of insurance, you must remember to do your own research before availing this option.
NO! It is not mandatory to take insurance for a personal loan.
Personal loan/Credit card
If a person dies without paying his personal loan or credit card bill, the bank cannot ask the surviving members of his family or his legal heir to repay the loan. Since it is an unsecured loan, there is no such thing as collateral and hence the property cannot be attached.
A personal loan protection insurance helps you cover the inability to repay the loan due to unfortunate circumstances such as death, unemployment, or due to medical conditions. The responsibility of repaying the personal loan will not fall on your dependants or your family.
The benefits of loan insurance include coverage provided by the policy during unforeseen events such as unemployment, disability or sudden death, tax benefits under Section 80C, money back at the end of tenure period and removing the burden on the family to repay the loan during times of distress.
The premium for a term plan of 1Cr would be around Rs 8,000 to Rs 15,000. The same cover costs an average of Rs 50,000 in a home loan insurance plan. A term plan is therefore more affordable as compared to a HLPP.
In terms of coverage, a term plan is an umbrella cover that pays out death benefit which can be used for any purpose. Whereas a home loan insurance plan covers only the outstanding loan amount. Therefore, the sum assured will decrease over the policy term (as the loan gets repaid) until it becomes zero.