Congratulations on your decision to become a homeowner! As you embark on this exciting journey of owning a home, it is essential to protect your investment and ensure financial security. One way to achieve this is through home loan insurance, a valuable safeguard for borrowers like you.

What is Home Loan Insurance?

Home loan insurance is a type of insurance policy specifically designed to protect borrowers in the event of unforeseen circumstances that could impact their ability to repay their home loan. It acts as a safety net, providing financial support and covering the outstanding loan amount in situations such as death, disability, critical illness, or loss of income.

Apart from traditional home loan protection insurance, you also have the option to opt for term insurance on your home loan. This type of insurance covers the outstanding home loan amount in the event of the borrower's death. It ensures that your family is not burdened with the repayment responsibility and can maintain ownership of the property.

Key Features and Eligibility Criteria of Home Loan Cover Plans 

Coverage Amount: The coverage amount for insurance on housing loans is generally linked to your outstanding loan balance. The higher the loan amount, the higher the coverage you may require. Loan amounts start from as low as Rs 2 Lakhs at IIFL Home Loans.

Premiums: The insurance premium is based on factors such as the loan amount, age, health condition, and the term of the insurance policy. Generally, the premium is paid annually, but some insurers offer flexible payment options. Choose the payment frequency that aligns with your budget and cash flow.

Eligibility: The eligibility criteria may vary between insurance providers. Typically, individuals between certain age brackets of say 18-75 years are eligible for home loan insurance.

The location of your property, your health conditions, your credit score, and lifestyle factors are also assessed during the application process.

Why should you consider buying an insurance policy for home loans?

The number one reason is to protect your loved ones from any financial burden. Life is unpredictable, and the unfortunate events of disability or death can cause immense financial strain on your family. Home loan cover plans ensure that your loved ones are not burdened with the responsibility of repaying the home loan if something were to happen to you.

In line with the first reason, these plans also safeguard against financial uncertainties. During the tenure of your home loan, unexpected events such as a serious illness or loss of income can put you at risk of defaulting on your loan repayments. Home loan insurance helps cover the outstanding loan amount during such challenging times, providing you with peace of mind and financial stability.

With a home loan protection plan in place, your family can avoid liquidating other investments or assets to repay the home loan. They can direct other streams of income to additional needs and priorities.

Key Things to Consider Before Opting for Home Loan Insurance

Sure, an insurance policy on your home loan sounds like a safe bet. But a blind decision could lead to a potential burden in the future. Here are some considerations you should keep in mind before opting for it:

Evaluate Your Needs: Assess your financial situation, including your income, savings, and existing insurance coverage, to determine the appropriate amount of coverage required for your home loan. 

Compare Insurance Providers: Research and compare various insurance providers to find the one that offers comprehensive coverage, competitive premiums, and excellent customer service.

Loan Tenure Alignment: The insurance tenure should be customised to align with your loan tenure. This ensures that the insurance coverage remains in sync with the outstanding loan balance and provides protection throughout the entire loan repayment period.

Policy Enhancements: Depending on the insurance provider, you may have the flexibility to enhance your policy coverage by adding additional riders to meet specific requirements. These enhancements may come at an additional cost.

Understand Policy Terms and Conditions: Thoroughly review the policy terms, including coverage limits, exclusions, waiting periods, and claim procedures. Be aware of any limitations or restrictions that may apply. Read the fine print at IIFL Home Loans and make your decisions with professional help.

If you are stuck at any step of the process, you can reach out to IIFL Home Loans and they will assign a representative to address any concerns. 

Final Takeaway

Home loan insurance is an essential protection for borrowers, offering financial security and peace of mind during the tenure of your home loan. By carefully considering your needs, comparing insurance providers, and understanding the policy terms, you can make an informed decision that aligns with your requirements. With the right insurance coverage from IIFL Home Loans in place, you can confidently embark on your homeownership journey, knowing that you have taken steps to safeguard your investment and secure your family's future.

FAQs

1. Do home loan protection plans come with extra riders?

Yes, examples of home loan insurance riders include:

• Critical Illness/disability coverage

• Loss of Income Insurance 

• Joint Borrower Insurance

2. Is home loan insurance mandatory when applying for a home loan?

No, it is not mandatory but advisable to be on the safer side. 

3. How is home loan insurance different from regular home insurance?

While home loan insurance protects the borrower and their family by covering the outstanding loan amount in case of unforeseen events, regular home insurance focuses on protecting the physical structure and contents of the home. Both types of insurance are important for homeowners, addressing different aspects of protection for their property and financial well-being.

4. What are the eligibility criteria to apply for home loans?

At IIFL Home Loans, the following requirements need to be met to apply for a home loan:

• Nationality: Indian

• Age: 18 to 75 years

• Salaried or self-employed

• Loan tenure: Up to 25 years

5. Can I calculate my home loan EMI before applying for a home loan?

Yes! In fact, it is recommended that you check to see if you can even afford the financing that you need for your new home. IIFL Home Loans has a home loan calculator, available online for free. It gives you instant results based on the expected loan amount, potential interest, and loan tenure.