Looking to buy a house and can't decide which insurance to go for a Mortgage Insurance or Term life insurance? Lets discuss both the above in details here -
If you have taken a home loan of Rs 40 lakh and covered under home loan insurance. If after a year, your outstanding loan comes down to Rs 39 lakh, then your sum assured also comes down to Rs 39 lakh. In short the sum assured is adjusted against your home loan liability.
Salient features of Mortgage Insurance plans -
1. Sum Insured will reduces each month/year
2. No maturity amount on survival of the term
3. No extra benefit to the nominee, other than payment of home loan liability
4. Single premium or annual premium option
If you have taken a home loan of Rs 40 lakh and covered under term life insurance. If after a year, your outstanding loan comes down to Rs 39 lakh, then your sum assured will remain same to Rs 40 lakh. So in case of death claim, your liability to the bank (i.e. Rs. 39 lakh) will be paid to bank and remaining amount (i.e. Rs. 1 lakh) to your nominee.
Which one to go for?
It is always better to go for term insurance plan as it is available in less premium (compare to home loan insurance). Mortgage Insurance covers function exactly like a simple term plan, except that the sum assured keeps decreasing with the amount owed to the lender. Don't take any other plan like ULIP or endowment if you are only thinking of insurance. Home loan insurance is just a customise marketing product of term insurance.
If you have taken a home loan of Rs 40 lakh and covered under home loan insurance. If after a year, your outstanding loan comes down to Rs 39 lakh, then your sum assured also comes down to Rs 39 lakh. In short the sum assured is adjusted against your home loan liability.
Salient features of Mortgage Insurance plans -
1. Sum Insured will reduces each month/year
2. No maturity amount on survival of the term
3. No extra benefit to the nominee, other than payment of home loan liability
4. Single premium or annual premium option
If you have taken a home loan of Rs 40 lakh and covered under term life insurance. If after a year, your outstanding loan comes down to Rs 39 lakh, then your sum assured will remain same to Rs 40 lakh. So in case of death claim, your liability to the bank (i.e. Rs. 39 lakh) will be paid to bank and remaining amount (i.e. Rs. 1 lakh) to your nominee.
Which one to go for?
It is always better to go for term insurance plan as it is available in less premium (compare to home loan insurance). Mortgage Insurance covers function exactly like a simple term plan, except that the sum assured keeps decreasing with the amount owed to the lender. Don't take any other plan like ULIP or endowment if you are only thinking of insurance. Home loan insurance is just a customise marketing product of term insurance.
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