Insure Your Home Loan with the Right Cover

At this Mathpal says, “If the borrower dies at this stage, the insurer would pay off the balance Rs.41 lakh directly to the bank or the borrower's family and the loan is closed.” The family would get the entire sum assured of Rs.50 lakh in case of term cover. He adds, “Even after settling the loan amount, the family can still make a saving of Rs.9 lakh.” The previous term plans were more expensive than HLPP.

Suresh Sadagopan says, “However, with the advent of online term insurance plans, a home loan borrower may end up buying a term plan cheaper than HLPP.”A person, who is 35 years old, will have to pay an annual premium of Rs.4850 for 20 years, for the amount of Rs.50 lakh. Karthik Jhaveri, Certified Financial Planner of Transcend India says, “The biggest advantage of a term plan is the life cover remains constant in a term plan over a period of time whereas in HLPP it keeps declining.”

The principal amount of over Rs.1.72 lakh can be stationed with the insurer, under the HLPP scheme. In early years if the person stick to the conventional term plan then the person was benefited from lower premiums. Sadagopan said that one can station the money that he or she saves in the high-growth tools such as the equity-linked savings schemes (ELSS) which provides similar tax breaks rather than fastening the higher premium.