Home Loan Protection Plan Vs Term Insurance Plan In India

If you are finding the best Home Loan Protection Plan & Term Insurance Plan in India, then this article is for you. Here, we will discuss two options, term insurance policy, and home loan insurance.

A loan insurance protection plan covers the balance amount to be paid in case of death of the borrower. The plan is specifically made for high-value mortgages. The premium rates are higher and depend on several factors including the loan amount, the age of the borrower, the medical history of the borrower and the loan tenure.
 
The loan insurance cover acts as a surety to the lenders. The loan cover is bundled with the loan amount. The borrower can either pay the initial premium himself or he can get it funded by the lender. The options come with different tax implications. If the borrower pays the premium, he will be eligible for tax deduction under Section 10(10D) and Section 80C. However, if it is paid by the lender and is included in the loan amount, the borrower will not get any claim deduction.

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The insurance provided by the loan cover will gradually reduce as the loan gets repaid. However, the insurance cover stays constant in a term plan. It will cover the outstanding home loan and will also meet the other financial requirements of the borrower�s family in case of unfortunate death.
 
The loan insurance is of little significance once the borrower has a prepaid loan. It is the same case when the sum assured declines with the time. It is the reason term plan should be considered for loan insurance.
 
Also, loan cover insurance is associated with a single premium option which implies that if the borrower prepays the loan amount, there will be no impact on insurance cover or premium. There will be other portability issues if borrowers want the loan to be refinanced by another lender.

A vanilla term insurance is a better alternative than a mortgage insurance policy. The term plans are cheaper and also provide high cover to the borrower.

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The financial planners suggest the individuals pick a term plan so as to cover the loan. However, there are other loan protection plans designed and offered by the insurance companies to take care of the outstanding home loans in the event of unforeseeable circumstances.

One of the most important dreams in a person�s life is to buy his or her home. To fulfill a dream, an individual takes a home loan which puts the house on mortgage. The home remains with the lender until the time buyer doesn�t pay the complete loan amount. However, it is important to safeguard the property so that in the event of an accident the home remains with the family. The motive is achieved by a term insurance policy or home loan insurance.

Refinancing Your Home Loan - Risks And Benefits

If you are Searching for Refinancing Your Home Loan then here is the Risks And Benefits of Refinancing Your Home Loan.

Risks Of Refinancing

1. Fees:

There may also be exit fees that you�ll have to pay out of pocket, too. These are fees that you may be charged for exiting out of your loan early and if you have a fixed rate home loan, these can be quite high. There may also be upfront fees for your new loan as well. In addition to exit fees there are also upfront fees charged by your new lender, such as application fees and valuation fees.

2. If you have a bad credit rating you might not get a good rate:

 Refinancing your home loan can also hurt you if you have bad credit history. If your credit history is less than stellar you may end up with a higher rate when you refinance. This isn�t in your best interest and can hurt your bottom line. A poor credit history can give you a higher interest rate instead of the lower rate that you were hoping for.

3. More features could equal more fees:

A sometimes hidden risk in refinancing comes in additional features that a lender may offer. A lender is always looking for business so they may try to persuade you to refinance by offering you features like a free credit card or an offset account. While these may sound like benefits, they could come with additional fees or tempt you to spend more. If your current home loan doesn�t have additional features it also might not have the additional fees. This will mean that while you�re possible saving in interest, you�ll be paying more money in fees.

4. Longer loan duration:

Refinancing may also lock you into your home for longer than you planned on staying. If you had hopes of moving soon, refinancing your home loan could hurt your efforts. If you move too soon the monthly savings you gained may not have been worth the overall cost of refinancing.

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Benefits Of Refinancing

1. Access equity: 

One of the benefits of refinancing is having the chance to access equity you�ve collected in your home loan. This can then be used for things like renovations, investing, purchasing a new car, taking a holiday, or any other pursuit you may be able to think of.

2. Get a better rate:

 Another benefit of refinancing your home loan is to get a better interest rate so your repayments will be lower. If you know you qualify for a low rate this could potentially save you a lot of money. This is one of the biggest benefits of refinancing.

3. Security:

By choosing to refinance your home loan you may also be able to switch to a fixed rate loan. This will allow you to benefit from the protection of a locked interest rate which will stay the same for the entire life of the loan and protect you from fluctuations in the market. If you currently have a variable rate home loan refinancing to a fixed rate might benefit you.

4. Increase the length of your mortgage. 

This can reduce your repayments by spreading them out across a longer period of time. This may not be the best solution if you�re having trouble making payments. Try to seek the advice of a professional financial counsellor who can help you get out of your repayment rut, as over time you�ll spend a lot more in interest if you opt for this strategy.

Tips to Get Yourself An Effective Home Insurance Policy

 Tips to Get Yourself An Effective Home Insurance Policy: Purchasing or constructing a house, though initially quite stressful, can be one of the best investment decisions one can make. House insurance is an automatic addition which is a necessity to protect your new house from any potential risks or dangers. With a house comes house insurance. However, purchasing a home insurance policy also means that you are adding an expense to your future monthly budget by way of insurance premiums.

Compare � Comparison shopping is something that you should do before buying anything, not just insurance policies. When it comes to Home Insurance, different policies will offer different benefits. Compare different policies and their features, and choose the one that best fits your needs.

Understand your policy thoroughly � Read your policy documents without fail. You need to know every detail about your policy to avoid surprises later.

Be in touch with your insurer � Got any queries or doubts about your Home Insurance policy?Don�t stick to your assumptions, instead get in touch with your insurer and clear them.

Buy add-on covers if necessary � There are a lot of add-ons available with Home Insurance policies. You can invest in them if necessary. For example, if you live in a neighbourhood where theft is common, you can buy an additional cover for your belongings against theft and burglary.

Amplify your policy � Certain scenarios will require you to make changes to your existing insurance policy. For example, if you plan to expand your property or buy costly interior decors for your home, you need to include these in your policy accordingly.

Raise your claims on time � There is a time limit on raising claims after an event (which is covered) has occurred. If you do not file your claim within the stipulated time, then you�ll miss out on any applicable benefits. This is why we stress on reading your policy documents thoroughly!

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Raise the Amount of Your Deductible

In insurance terms, the deductible is the amount of money which the policyholder must pay for a loss before the insurance company begins to pay for the claim. So, the higher your premium amount, the lower will your insurance premium be. Now, insurance companies may sometimes have separate deductible amounts depending on the kind/nature of the damage like earthquake, hail storms, fire, etc. Insurance companies to recommend customers to keep their deductible amount high, in order to save on future premium costs.

Bundle Insurance Policies

You�re out to buy an auto insurance policy being sold by a certain company. The same company is also selling a home insurance policy, the terms of which are quite favourable and suited to your needs. In such cases, it might be a smart move to purchase both the policies from the same insurer as you are likely to get a discount on your premium. However, to ensure that this arrangement of combined pricing is lower than the cost of purchasing two policies from separate insurers.

Don�t Skim on Research

Purchasing a home insurance policy is quite a task, with the rising number of insurance providers now offering lucrative options all around. Take your time to go around and research on the various insurance providers offering home insurance policies. Go online, check for websites, user�s feedback, ratings, for different policies. Offline, you could check with people who have purchased home insurance and could give you valuable feedback, check with independent insurance agents who can provide you with policy deals from multiple insurers, contact the branch office of the insurance company itself and request for a quote. When you�ve done your research, you will get a fair idea about the range of services/covers being provided by various insurance providers, along with an idea about how much your overall insurance package is likely to cost you as well.

Now that you know the importance of a Home Insurance cover, maybe it�s time for you to get one for your home. Unfortunately, we do not offer Home Insurance as of now, but you could explore our other products.

We Should Buy Home Insurance Or Not?

We Should Buy Home Insurance Or Not?Over the past few years, there has been an increase in the number of homes being bought across the country. The property market has been pretty ripe for investments, and folks across the nation jumped at the opportunity. As an icing on the cake, most of the financial institutions offered attractive Home Loans to ease the burden of finances on home buyers too. Although there was an increase in the number of home buyers, there was hardly a handful among them who purchased Home Insurance.

We Should Buy Home Insurance Or Not?

While half of the population has no clue about Home Insurance, the ones that do know are under the impression that they�ll have to pay high premiums and will be subject to a complex documentation and claims process.

Stella D�Souza, a mid-level employee in a private firm, said, �I never knew there was a something called a Home Insurance. But, luckily, my husband knew about it. And today, we�re glad we insured our home. After all, one can never predict natural hazards, right!�

Of course, we completely agree with Stella! With the frequent climate changes and out-of-the-blue occurrences of natural calamities like the Chennai floods, cyclone Vardah, or the earthquake in North India, it has become all the more important to buy Home Insurance along with your new home. With an insurance in place, restoring damaged property from calamities won�t be a financial burden for you.

What About The Cost?

The cost attached to a Home Insurance plan depends on a number of factors. The premium you pay will depend on the sum insured. The sum insured will be dependent on the cost of construction of the property and its built-up area. The cost of construction will take into consideration the quality of construction and the materials used and the locality in which the property stands.

A comprehensive Home Insurance policy is essential to secure your home against unforeseen events, no matter the cost. You should opt for a scheme that offers adequate coverage for your home and belongings. If you need help calculating how much coverage you�ll require for your home, there are quite a few Home Insurance calculators available online.

While deducing the sum insured, remember that it is important to value all your belongings along with your property. You�ll need to get as accurate as possible with your calculations. Wondering why? If you under-insure, the insurance company will pay only your sum insured even if the property damage cost was higher. On the other hand, if you over-insure, the insurance company will pay only the property damage cost.

For instance, let�s assume that you bought a cover of Rs. 75 lakh. On an unlikely event (which is covered), your property gets damaged and the reinstatement cost is estimated to be Rs. 35 lakh. Your insurance company will pay you only Rs. 35 lakh (and not Rs. 75 lakh).

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What Is Covered And What Is Not?

Most Home Insurance plans available cover two kinds of property damages:

Damage to the structure of your property � These plans cover only damage caused to the structure of the property. If you opt for this plan, you can claim the construction cost if any damage is caused to your property by any of the unlikely events mentioned in the policy document.

Damage to contents of your property � These plans offer compensation for any damage caused to the contents of your property such as the furniture, appliances, jewellery, etc. due to any of the events mentioned in the policy document.

There are quite a lot of comprehensive policies in the market that provide coverage for both kinds of damages mentioned above. However, such policies are available only for homeowners. If you�re a tenant, you can purchase insurance cover only for your belongings.

In addition to the covers mentioned above, there are a lot of add-on covers available too. Some of the common add-on covers are rent cover, terrorism cover, and burglary/theft cover. Arent cover helps you with rent expenses when you�re staying in an alternative accommodation due to repair work. A terrorism cover caters to damages caused by structure and contents of your property due to terrorist acts. And a burglary/theft cover, as the name suggests, caters to the damages caused by structure or contents due to theft or burglary.

Now let us talk about what�s not included in Home Insurance plans. Although the policy document will contain all the exclusions, here are some of the common exclusions found in Home Insurance policies:

• Any damage caused due to your negligence or any wilful damage caused to the property and its contents will not be covered
• In case you have not disclosed details or have provided wrong details about the property and its contents, the policy will not cover the same
• Any pre-existing damages to the property or its contents will not be covered by the policy
• If there are any manufacturing defects in the contents, the policy will not cover such defects

The above-listed exclusions are some of the common ones that we have come across. However, please refer to your policy�s documents to know what�s not included in the policy.

How To Make A Claim

First and foremost, you need to inform your insurance company about the destruction caused by your property or its contents. Usually, there is a time limit within which you have to file your claim, so don�t delay.

You�ll be required to fill up a claim form. Ensure that you provide correct information and include all details on the claim form. The insurance company will initiate the claim process only after they receive your claim form. Simple, isn�t it?

Why You Should Ensure Your Home

Here are a few reasons why it makes sense to buy a Home Insurance policy:

Financial protection � A Home Insurance policy provides coverage against calamities, both natural and man-made, like fires, earthquakes, floods, vandalism, etc. Cyclone Vardah had left behind a trail of destruction in Chennai and those who didn�t ensure their homes had to spend huge amounts to repair the damages.

Protection for contents � With Home Insurance, you can protect your personal belongings and valuables against thefts and calamities. There are many covers and add-ons available to safeguard all the contents of your property including furniture, electronics, pieces of art, etc.

Temporary expenses � In the case of any calamities, you�ll have to temporarily shift to a different residence while rebuilding or renovating your property. Home Insurance will cover the rent expenses if you temporarily shift to another apartment or house.

Protect Home From Natural Calamities With Home Insurance

Protect Home From Natural Calamities With Home Insurance: A house is one of the most expensive assets one owns in a lifetime. Yet it�s often left exposed to the risks of damage without any financial security. Most of us put in our hard-earned money to buy a house and are often reluctant to stretch further to get an insurance.

You may not be able to protect your home from such damage, but you can get financial support to recover from it. A home Insurance plan can help you get through.

Home Insurance and water damage coverage

If you take a Home Insurance plan that covers water damage, it would provide protection against water damage due to any sudden or accidental cause. However, insurers deny claims for gradual damage.

Inclusions and exclusions

Home Insurance typically offers coverage for the property and the content inside for losses incurred due to natural calamities such as earthquakes, lightning, cyclone, floods, etc. Valuable content is also covered if lost due to theft.

Understanding the terms and conditions of a policy before buying it is necessary to know what�s included and what�s not. For example, water seepage through walls and roof is not covered in the floodplain.

Rain can cause various types of damages to your home. A deluge caused due to excessive rain can be tackled by a well-protected policy. One can also get a cover for the personal belongings under the flood plan. However, flood victims are required to pay a minimal amount on account of the deductibles. The details of deductibles are decided right at the time of purchase.

Home Insurance policies purchased at the time of taking Home Loan covers building structure only. They do not cover content such as household articles and electrical appliances, which can possibly get damaged too during a natural calamity. Such policies mostly cover fire and flood. In such scenarios, the best way to buy Home Insurance is to have an adequate sum insured including a cover for the content inside.

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How to make a claim

Following are the steps you need to adapt to make a claim:

• Document all the damages caused due to rain. You can either take photographs or shoot a video.
• Try and preserve all damaged items for inspection.
• Maintain a list of the items that have to be repaired by you for temporary use.
• All claim-related documents should be well preserved for future use.

Considering Home Insurance in our country is not that expensive, it is always advisable to avail one with the required add-ons so that in the event of a heavy downpour, you are shielded from an expensive repair bill.

Things To Keep In Mind Before Buy Home Insurance

Things To Keep In Mind Before Buy Home Insurance: Home Insurance is a very important risk mitigation tool for the homebuyers. With global warming on the rise, several cities are prone to damages caused due to flood, storm, landslides, etc. Home Insurance can protect the insured with financial support if the covered property suffers loss due to any of the perils listed in the insurance document. Home Insurance is of two types � Fire insurance policy (FIP) and comprehensive insurance policy (CIP). While FIP allows financial cover from damages such as fire, storm, flood etc., CIP provides two types of cover that include building the structure in first type and content of the home under the second type.

In this article, we take a look at 5 important things to keep in mind while choosing a Home Insurance policy.

How Much Home Insurance Cover Value Do You Need?

Home can have risk on its structure and on the content inside. While estimating the insurance requirement for your home structure, compare your home value with the prevailing market cost to build similar property. Underinsurance of property can expose you to financial risk. Similarly, when considering the insurance for contents in your home, take into account all the belongings and make a list of all items, estimate its prevailing value, and accordingly get the adequate value of insurance

Similarly, when considering the insurance for contents in your home, take into account all the belongings and make a list of all items, estimate its prevailing value, and accordingly get the adequate value of insurance coverage.

What Type Of Covers You Should Take Under Home Insurance?

While getting the insurance for the structure of your house, you have the option to get the insurance value as per depreciated value method or the reinstatement value method. The depreciated value may fall short of realising the total cost of the property as depreciation may reduce the cover size. On the other hand, reinstatement method considers the cost required to rebuild the property if it is damaged, so it is better to opt for the reinstatement cover over the depreciated value cover.

The depreciated value may fall short of realising the total cost of the property as depreciation may reduce the cover size. On the other hand, reinstatement method considers the cost required to rebuild the property if it is damaged, so it is better to opt for the reinstatement cover over the depreciated value cover.

Different Insurance For Different Purpose Vs Single Insurance

As you have the option to ensure the building and contents separately, you have the option to get a comprehensive insurance for both building and contents, or, a separate policy for both purposes. While getting the insurance you should read the items covered under the comprehensive policy and its cost. You may find separate insurance covers to include more items in comparison to a single cover, but at the same time it may cost you more and during the claims will be settled separately as well. A combined content and building insurance policy may cost you less and at the time of damage, the claim is settled together by the same insurer.

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While getting the insurance you should read the items covered under the comprehensive policy and its cost. You may find separate insurance covers to include more items in comparison to a single cover, but at the same time it may cost you more and during the claims will be settled separately as well. A combined content and building insurance policy may cost you less and at the time of damage, the claim is settled together by the same insurer.

You can make the choice of single combined policy or different policy depending on what are the types of item you are looking to get covered and whether you get such items insured in a single policy or not.

Covers That You May Not Need

Sometimes the Home Insurance policy may provide cover which you may not need. If you skip such extra covers, then the cost of a policy may get reduced. For example, you may not need a flood cover if the place you live in is not susceptible to floods. Similarly, depending on your requirement you may decide to skip policy which is charging extra money for covers that you do not require.

Use Online Insurance Tools To Compare

You may get attractive offers from the local insurance agent, but at the same time, you must compare a large number of policies provided by various insurers by using the online comparison tools. It�ll help you to figure out the cost of insurance, things that it would cover and accordingly you can call the local agents to check their rates.

Finally

You must declare the correct information while buying the Home Insurance policy. At the time of claim settlement, you may need to furnish the proof of belongings or its valuation. Try to keep the bills of valuable things to prove its value at the time of claim settlement.

Also, you must maintain the building in the best feasible way and look after regular repair and maintenance for proper upkeep. Poor maintenance of the building could be a reason for rejection of the claim.

Best Insurance Cover For Your Home Loan

Best Insurance Cover For Your Home Loan: A home is a place where dreams are built, memories are treasured and relationships are reinforced. Buying and owning a dream home is an aspiration all of us have and it is one of the most important financial decisions you will need to make. Most Indians who decide to buy a home opt for a Home Loan. A Home Loan is one of the longest debts in your life, which requires a long-term commitment. You owe money to the lender and this increases your risk profile. A Home Loan insurance plan mitigates this risk.

Why You Need Home Loan Insurance

Your Home Loan needs to be paid off to the lender in the form of Equated Monthly Instalments (EMI) over the tenure of the loan. This liability needs to be repaid to the lender, irrespective of whether you are alive or not. In case of your untimely death during the term of the loan, your family members will need to repay the loan. Home Loan insurance ensures that the insurance company pays off the outstanding loan amount in the eventuality of your death, thus protecting your family members from the burden of repaying the Home Loan.

How Does Home Loan Insurance Work

The working of a Home Loan insurance is similar to a Term Life Insurance policy. The differentiating factor between the two insurance policies is that in the case of a Home Loan insurance, the sum assured is not a fixed sum, but will be equal to the outstanding home loan amount. In other words, the insurance cover available under a Home Loan insurance policy keeps reducing with the payment of EMIs, which reduces the outstanding loan amount. In some cases (for example, the Home Safe Plus scheme of ICICI Bank), the cover available is on a flat basis instead of a reducing basis. In this case, a fixed amount is paid out to the beneficiary irrespective of the outstanding loan amount.

What Is The Eligibility Criteria

Home Loan insurance eligibility criteria differ from one company to another. The minimum entry age is 18 years. The maximum age of the borrower while availing the Home Loan insurance is usually 50 years for most banks; some banks extend this to up to 60 years. Some banks also stipulate the maximum age of the borrower on the expiry of the policy

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Premium Payment

The amount of premium depends on:

Age of the borrower- Premium increases with age of the borrower. Usually, insurance companies insist on medical tests beyond 40 years. Below this, a simple declaration is sufficient.

Amount and tenure of the Home Loan- Premium increases with the duration of the loan and amount. Even for the same insurance cover, a higher term will result in a higher premium.

Borrower�s medical record- If the borrower is in good health, premium will be at regular rates. For example, if you have had a heart attack in the past, the premium you will need to pay will be higher than a borrower with no past incidents.

Insurance companies generally insist on a one-time payment of the premium. However, in most cases where insurance is taken from the company with which the Home Loan lender has a tie-up, the premium amount is bundled with the loan and included in the EMI amount. For example, if the Home Loan is for Rs. 20 lakhs and the insurance premium is for Rs. 2 lakhs, the lender pays the entire premium amount to the insurance company upfront. The new loan amount will now be Rs. 22 lakhs, which will be spread out as EMIs over the tenure. So in effect, you will be paying interest on the Rs.2 lakhs premium amount also.

What Is The Claim Process?

Home Loan insurance policies are taken in the name of the borrower of the Home Loan. In the case of death of the borrower, the onus lies on the family members to file and obtain the claim amount. If the claim is passed, the amount is directly paid to the lender or to the family member beneficiary. As in the case of all term insurance policies, in case the borrower is alive beyond the term of the policy, he does not get back the premium paid.

How To Choose The Right Insurance Policy

It is not compulsory to take a Home Loan insurance policy from the lender/group company of the lender. Usually, Home Loan lenders tie-up with insurance companies and recommend borrowers to secure the policy from them. But as a borrower, you can secure a Home Loan insurance from any company. You can either avail the policy along with the Home Loan or at a later date.

Though it is not mandatory to have an insurance policy to cover your Home Loan, it is highly recommended to have one to reduce the burden on your family. It is always better to scout the market, do a thorough research and compare policies from different companies before deciding which insurance policy to purchase.