Home loan insurance is also called a Home Loan Protection Plan (HLPP). So, what is home loan insurance? It is a specialised insurance product offered by lenders or insurers whose main aim is to cover the outstanding loan amount in certain unexpected situations, most commonly the death of the borrower. This insurance is not mandatory under Indian law or regulatory norms (RBI, IRDAI), but many financial institutions offer it as an option.
Does Home Loan Insurance Cover Death?
The basic idea is if the borrower dies during the loan tenure, the insurer pays off the remaining home loan to the lender, so the borrower’s family does not have to worry about the debt or risk losing the house.
The insurance period usually matches the duration of the home loan. If more than one person has taken the loan as co-applicants, all co-borrowers are typically protected under the plan.
Beyond death, some plans let you include riders to cover critical illnesses (like cancer, heart attack), disability, or even unemployment for a limited period. This increases premium but gives wider protection.
Types of coverage:
Level cover: The insured sum stays the same over the loan period.
Reducing or hybrid cover: As you pay down the loan, the outstanding balance decreases, and so does the insurance cover or the structure is hybrid (constant initially, then reducing) to match.
Benefits include peace of mind (your family won’t be saddled with debt if something happens to you), potentially lower financial risk, and sometimes tax benefits under Section 80C for the premiums paid.
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| Particulars | Minimum | Maximum |
| Sum Assured (in Rs) | 30,00,000 | No Limit |
| Policy Term (in years) | Equal to Home Loan Tenure | |
| Premium Payment Term (in years) | Single | |
| Entry Age of Policyholder (in years) | 18 | 50 |
| Age at Maturity (in years) | - | 60 |
| Single Premium (in Rs) | 2,000 | No Limit |
| Payment modes | Only Single |
What is home loan insurance?
Pooja
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2021-09-21T10:08:36+00:00 2021-09-21T10:14:33+00:00Comment
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