Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications

Thursday, March 13, 2014

Insurance Cover for Your Home Loan

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

 

While deciding to buy a home, most of you would opt for a home loan. You risk profile increases greatly when you take a home loan, as it is one of the longest debts in your life, requiring a long term commitment. Let’s see how home loan insurance reduces this risk.

Why is home loan insurance required?
Your home loan liability should be paid off whether you are alive or not. The loan will need to be repaid by your family members if you die during the term of the loan. If the loan is not repaid, the lender can take possession of your home. Home loan insurance will eliminate your family’s burden to repay the loan as the insurance company will pay the outstanding loan amount.

Eligibility criteria-
Every insurance company has different eligibility criteria. Most companies specify the minimum entry age of the borrower as 18 years and the maximum entry age as 50 years (some banks extend this to 60 years). The maximum age of the borrower at the maturity of the policy is also sometimes stipulated. Some banks also cap the maximum sum assured and have minimum and maximum policy term requirements. Kotak has fixed the maximum term as 30 years while HDFC Life has fixed the maximum sum assured as Rs. 30 lakhs.

Working-
Home loan insurance is similar to a term life insurance, except that in the case of the former, the sum assured is equal to the outstanding home loan amount and it is not a fixed sum. So, in effect, the insurance cover you get under a home loan insurance reduces when you pay your EMIs. 

Example: Raj has taken a home loan of Rs. 20 lakhs and repays Rs. 4 lakhs of the principal over the next 5 years. After 5 years, Raj expires, leaving Rs. 16 lakhs of outstanding loan. If he has taken home loan insurance, the insurance company will pay Rs. 16 lakhs to the lender.

In some cases (for example, the Home Safe Plus scheme of ICICI Bank), insurance cover is available on a flat basis instead of a reducing basis. In this case, the fixed amount is paid to the beneficiary.

Cost-
Premium towards home loan insurance depends on the age of the borrower, amount and tenure of the home loan and the borrower’s medical record. You can either make a single premium payment (generally insisted) or pay the premium periodically.

Claim-
The insurance is taken in the home loan borrower’s name, and in case of death of the borrower, the family members should file for the claim. The claim amount is paid directly to the lender or in some cases, to the family member. If the borrower is alive beyond the term of the policy, he does not get back the premium paid.

What you should watch out for-
In most cases, your home loan lender will have a tie-up with an insurance company, from where you will be asked to purchase the insurance. In this case, the lender pays the premium upfront, bundling this with the loan and including it in the EMI amount. This will work against you, as you will be paying interest on the premium amount as well.

Example: Suppose your home loan is for Rs. 20 lakhs and insurance premium is for Rs. 2 lakhs. The premium is paid by the lender to the insurance company. Your new loan amount will now be Rs. 22 lakhs, which will be spread out as EMIs over the tenure, resulting in you paying interest on the premium amount also.

Home loan insurance can be taken from any company at any time. You can also take a term cover for the value of your home loan. Although it is not compulsory to have an insurance policy to cover your home loan, it is highly recommended to have one to reduce your family’s financial burden.

For further information contact Prajna Capitalon 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap FundsInvest Online

      1. DSP BlackRock MicroCap Fund

2.Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

No comments:

Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications
Related Posts Plugin for WordPress, Blogger...

Popular Posts