Term insurance is a simple yet very flexible form of life insurance that many people purchase to safeguard their families from uncertainties. When buying a term policy, it is always necessary to consider your family’s current and future needs so that you can opt for adequate coverage. But apart from that, if you have other financial obligations, such as a home loan for which the EMIs are being paid, you should have term insurance for a home loan.
Term insurance for a home loan protection plan is nothing but a simple term plan that is linked to your home loan. Hence, when you purchase the term plan, it is with the understanding that any outstanding EMIs in the event of your death will be repaid by the sum assured of the term policy.
However, since the main objective of the term policy is to safeguard your family, you should be able to ensure that after the home loan has been repaid, your family should be able to utilise the remaining sum assured for their sustenance.
One of the main purposes of getting a term insurance plan is to ensure that your family is financially secure in your absence. If you have outstanding debts and loans to be repaid, such as your home loan repayment, term insurance will be beneficial. In case of your untimely demise, the death benefit sum assured from the term policy will be paid out to your loved ones. And if there are any pending home loan EMIs, your family can use some amount from the sum assured to repay these loans. The remaining amount will enable them to lead a comfortable life without any financial obstacles.
Keeping these two factors in mind, it is better to opt for a term plan with more coverage amount, such as a 1-crore term insurance or more. If you purchase the term plan early in life, for instance, at the start of your professional career, you can pay low and affordable premiums due to your age.
In such a case, even though your term insurance coverage is more, you will not be burdened with hefty premium payments. By opting for a longer premium paying term and policy term as per your needs, you can easily make affordable premium payments.
However, the term insurance coverage will also depend on your income. And if you are especially getting a term plan for your home loan, ensure that the sum assured of the term policy is ten times your annual income, which should also include the home loan EMIs. This is important so that factors such as the future rate of inflation do not affect the sum assured of your term insurance plan.
People who take home loans safeguard themselves with home loan protection plans. However, the thing with home loan protection plans is that the coverage of such plans is only limited to covering the repayment of the home loan. Your family will not be able to benefit from the home loan protection plan in case of your untimely demise.
But if you opt for term insurance for home loan protection, you will be able to safeguard your family and also your home loan under the same plan. Here are some important reasons why you should choose term insurance for your home loan:
Not many people are aware of the benefits of getting their term insurance policy linked to their home loan. By doing so, you are not only saving money by paying very affordable premiums and protecting your home loan, but you can also safeguard your family – and all of this can be done under a single-term plan!
L&C/Advt/2022/Sep/2350