Is property insurance mandatory for Axis Bank home loan?

No, according to the RBI, it is not legally mandatory for you to take property insurance along with a home loan for any bank. But most lenders like Axis Bank recommend opting for insurance to safeguard the borrower’s family from financial debt in case of any unfortunate event. Being a financial advisor, I’ve had people asking me why is property insurance mandatory for Axis Home loans, and I tell them it’s not legally required, but there are reasons the bank may strongly suggest it.

Why is Property Insurance Mandatory for Axis Bank Home Loan?

Most people assume it’s mandatory for Axis Bank, because the bank strongly recommends taking insurance to cover the loan, and I feel it’s all for the right reasons. See, I will not compel you to take insurance if you don’t feel the need for it, but you should know why it is an important investment among home buyers.

1. Taking insurance will protect your family, and not just the bank or lender. If the borrower dies in an unexpected event, the loan will automatically fall on the family. And if they cannot pay it, the bank may acquire the house and auction it. Insurance will save the family from this distress by covering the remaining loan amount. 

2. You can also avail for the tax benefits under Section 80C of the Income Tax Act.

3. If the loan-bearer dies unexpectedly, the bank may seize all the savings and investments to repay the outstanding loan. So, if the family saves the house anyway, they may have to give up on their investments and other valuables. Here also, an insurance will pay the outstanding loan and save your family from losing their assets.

So, that’s all the reasons most banks suggest taking property insurance. However, no bank can force you to buy it if you’re not willing to because, legally, it’s not mandatory. Hope this clarifies your doubt. 

Get Quick Disbursal of Housing Loan at Minimum Paperwork via NoBroker Home Loan Service!

Also Read:

What Does Home Loan Insurance Cover?

Home loans from Axis Bank are available to you for loan amounts up to Rs. 5 crores with terms up to 30 years at 8.75% p.a. and higher. Additionally, it provides house loans for low-cost homes and unique home loan packages that include EMI reductions and EMI exemptions. And you must be thinking about whether you should take home insurance or not. So let’s see is property insurance mandatory for Axis Bank home loan.

Is Axis Bank home loan property insurance mandatory or not?

No bank or non-banking financing firm will require you to purchase insurance coverage, even when it is necessary to do so when taking out a loan. The purchasing of home loan protection coverage is optional. Home loan protection plan purchases with loans are not required by law or regulatory organisations like the RBI or IRDAI. Borrowers cannot be made to purchase insurance plans; the decision to buy one is entirely up to the buyer. This guides you about whether Axis Bank home loan insurance mandatory or not.

Why you should get home loan insurance?

• If the borrower passes away, the insurance provider pays back the loan balance to the lender. The beneficiary receives payment of the excess amount.

• Under Section 80 C, one may take advantage of tax benefits.

• Additional extras, such as those for severe sickness, disability, or job loss, and home loan insurance policies are available. They will cover the loan balance not only in the event of death but also should any of the mentioned tragedies occur. These covers have an additional cost.

How to pick the ideal insurance plan?

Purchasing a home loan insurance coverage from the lender or one of the companies they have partnered with is not required. The insurance can be purchased at the same time as applying for a home loan or afterwards. You can do market research and request price estimates from providers. As a third-party service, the policy is sold by the bank for a commission. As a result, there may be circumstances in which home loan insurance is offered even when you don't need it. 

I hope you understood is property insurance mandatory for Axis bank home loans or not.