In this era of cut throat competition, where banks are introducing new schemes day after day, the insurance companies are not left behind. Private sector insurance companies have come up with innovative scheme where one can have a security of repayment of a loan if the borrower expires suddenly.
People do not prefer to take a home loan because of the risks associated with it. They are more worried about the uncertainties of life that holds them back from taking such a loan. Long loan tenure and repayment are among some of the top risks that come to the mind while opting for a housing loan.
As people are becoming more conscious about the uncertainties of life it make sense to pay a little extra and be secure of unexpected risks in the future. Introduction of schemes that protects a person against such risks is now becoming common.
Now-a-day the market is concentrated with several insurance products and innovation of home loan insurance schemes is the new attraction amongst the people. These schemes provide a wide range of choice for a person who wants to protect his home loan. Majority of these products currently available in the market are flexible enough and the premiums paid against them are eligible for tax exemption under the Income Tax Act.
Insurance schemes offered in the market have multiple options and a person can choose one that suits him the best. A variety of options can be combined together so that the policies can be modified to meet the specific requirement of a person. The premiums and returns differ according to the service provided under the policy
The insurance cover can be taken for entirely insurance purposes or for insurance and investment combined.
The policies that are based on entirely insurance purpose covers only the risk of non-payment due to a sudden demise of the borrower. Once the loan is repaid the insurance cover comes to an end and the borrower does not get anything. On the term's expiry, the borrower only gets the sum assured and the cover ceases without any maturity benefits. This is because term insurance plans are pure risk covers without any investment dimensions. Therefore, premiums under these plans are the lowest.