We all think about buying our own house at some point. This dream comes a step closer when we start earning. We think of everything, starting from the size of the house to the colour, the decor, and the number of rooms it will have. Unfortunately, the multiple responsibilities and financial burdens that come with adulthood make it challenging to fulfil this long-awaited dream. However, home loans become the facilitator that helps us achieve these goals.
When we invest in a home or a property and opt for a home loan, we are required to pay a certain amount monthly to the company from which we have availed of the loan. This long-term process requires thorough planning and stretches out to 20-30 years or even more. While we may have visions and goals for ourselves, we cannot tell what life has to offer in our journey. Hence, it is advisable to opt for home loan term insurance, which can help pay off the home loan debt so the family can keep the home bought for them.
What is a Term Plan?
The answer is quite simple when you ask, “what is a term plan?”. Term insurance means safeguarding oneself from a financial burden that may fall upon us in case of an unforeseen event. A term plan requires us to pay a certain pre-decided amount as a premium to the insurer for the maintenance of the policy.
How are term insurance policies and home loans related?
We can pair a home loan insurance policy or get term insurance for home loans. This implies that if in the duration of the payment of the loan, anything happens to the borrower because of which they are unable to work - this is specific to an accident, disability, demise, illness, and not the loss of job due to other reasons - the insurance will help their family, pay off the loan and secure them from a potential debt.
The family can use the amount invested in the term insurance for home loan to complete the payment of the loan, therefore promising a secure future for your family when there is no steady flow of income.
Why term plan is the best choice in paying off home loan?
Now that we have answered ‘what are term plans’ and ‘how do home loan insurance plans help you?’, let us look at why we should choose them in combination:
- Term insurance offers premiums that are more affordable with higher coverage.
- A term plan tied to a house loan typically features a mechanism where the cover lowers as the loan is paid off and is intended so that the cover is zero by the end of the term, leaving no balance.
- In a term life insurance policy, the sum assured remains the same. Therefore, we get the balance amount after the payment of the home loan as well, which can be used to meet other needs.
The best home loan insurance policy in India ensures the most significant financial security for us and our loved ones, so choosing a suitable one becomes essential to making our dreams of having the ideal home come true.
So, now you know what is term plan and what its significance is for home loans. Whenever you are investing in home loan term insurance, you can secure the home loan by correctly calculating the amount of the sum assured that may be needed. To ensure this, it is recommended to opt for the best home loan protection plan with coverage of at least 10-15 times their annual income and add to it the amount of the home loan.
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Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Reviewed By :
Prasad Pimple
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
