While taking a home loan in India, there are various types of insurance policies that are available to the borrowers. These policies provide coverage for a variety of risks that can be associated with home ownership.
It is important to note that some of these insurances may be mandatory while taking a home loan, while others may be optional. It is important for borrowers to carefully review the terms and conditions of their loan agreement to understand what type of insurance is required, and to consider alternative coverage to protect their investment in the home.
home loan insuranceMortgage insurance or also known as mortgage protection insurance, is a type of insurance policy that provides financial protection to homeowners in the event that they are unable to make their mortgage payments due to unforeseen circumstances such as death.
Home loan insurance can be purchased at the time of taking out the mortgage loan or at any time during the term of the loan. The cost of insurance will vary depending on several factors, such as the amount of the mortgage, the length of the loan term, the age and health of the borrower, and the type of coverage selected.
It should be noted that this insurance Not compulsory And no lender can force you to buy the policy at the time of taking the home loan.
property insurance: This insurance is mandatory by many banks. However, the borrower can choose to insure the property from any insurance company of his choice.
For example, SBI has mandated that the house/flat be comprehensively insured for market value covering fire, flood, earthquake etc. in the joint name of the bank and the borrower. The cost of the same is borne by the borrower.
Types of Insurance Available with Home Loan
As per SBI Home Loans (https://homeloans.sbi/), term insurance product is offered by SBI Life Insurance Company, which provides financial coverage for a specific time period to the term life insurance policy holder. In case of death of the life assured during the policy term, the death benefit is paid by the company to the beneficiary. This is an optional insurance.
On the other hand, property insurance is offered by SBI General which covers private residences and protects them against unforeseen damages and natural calamities. This is compulsory insurance.