The act of taking a home loan involves making restitution for extortionate periods, usually lasting years. Suppose something unexpected happens? A term insurance policy that is compatible with your Indian home loan duration provides an economical and robust means of ensuring your home and loved ones security.
🏡 How does a home loan become dependent on term insurance?
- Ideally, the sum assured will be at least equal to or more than the outstanding home loan on this typical term life policy.
- The duration of coverage is proportional to the length of your loan, such as 20 years?
- The sum assured is unchanging, unlike reducing sum mortgage insurance, which means your family can use the money as and when required, not just for the loan.
Term insurance is an essential aspect of Home Loans
- Financial Security for Family
The amount pledged can ensure the safety of your family's home and prevent them from falling into debt if you die while on a housing loan.
2. Big Cover at Low Cost
Indian term plans offer premiums that are both high and affordable. As an illustration, a young healthy adult can avail of 1 crore term cover at 16 per day.
3. Tax Breaks
By deducting premiums up to 1.5 lakh per year under Section 80C and exempting the death benefit from Section 10(10D), you can help preserve your family's full amount.
4. Extra Riders for More Protection
To extend the benefit beyond death, riders can be included, such as critical illness, waiver of premium, or disability cover.
5. Flexibility & Peace of Mind
In contrast to HLPP, term insurance policies can be extended, renewed or utilized for other financial purposes if your loan is paid off early.
Tips for Choosing the Correct Insurance Policy
- The minimum amount of coverage needed is equivalent to the outstanding home loan, but it should be more if not higher. Experts recommend using 10 your annual income, including EMI liabilities, to account for future needs and inflation.
- Policy term: Should be consistent with the duration of the home loan, or can be extended by some years for extra security.
- Consider finding someone who is trustworthy, usually your spouse or child, as a source of support.
- To set up a premium schedule, opt for monthly or annual payments that are proportional to your financial situation, with some individuals paying in addition to their EMIs.
Real‑Life Example
Imagine if Raj were to take out an 60 lakh home loan for 20 years and invest in term insurance for 25 years, it would be significant. His family receives 1 crore upon his death in the year 10. After paying off a loan of around 40 lakh, they have left aside lsufficient funds of 60 lakh for education and household expenses, as well as for future financial planning.
How does term insurance contribute to your financial situation?
- Not required, but highly recommended for financial security.
- Preserves your family from foreclosure or EMI exposure.
- Specifies extensive utilization, not just those who repay their debts.
- In contrast to home loans, these policies are significantly more affordable, flexible, and cost-effective.
- Take advantage of tax deductions in India.
Add term life insurance to your home loan for some peace of mind and long-term savings.That’s a smart move at CES 2017.