For many people in India, owning a home is one of the most important milestones in life. To accomplish the goal, they resort to a home loan. Although home loans are readily available at competitive interest rates, it is a big financial commitment. If you fail to repay the amount, the lender can seize the property. Therefore, the financial experts recommend having a life insurance policy before seeking a home loan as a backup to repay the loan.
If you are looking to apply for a home loan, it is advisable to purchase a term insurance plan with a sum assured that is ten to twenty times your annual income. This way, in the event of your unexpected demise, your family will have sufficient funds to repay the home loan debt you owe to the lender.
Often people get confused about whether to choose life insurance to get protection against home loan liabilities or the specially designed home loan protection policy. When you compare the two plans, you will find that the premium for home loan protection policies is much higher than life insurance for home loan.