“A Cost-Effective Solution” : Kanwar Bhatia Urges Home Loan Borrowers to Buy Insurance

A home loan is one of the most viable financial tools of the 21st Century, allowing people to purchase a residential property by making affordable monthly payments. These small EMI payments can last more than 15 years, but failing to make them on time can result in severe consequences. In case of any unfortunate events like the sudden demise of the homeowner or being diagnosed with a critical illness, the family members might lose their homes due to non-payment of these installments.

According to Kanwar Bhatia, the Executive Director of Urban Money, the lender can “repossess and auction the property to recover the loan amount” if they don’t receive home loan EMIs on time. To save themselves from this situation, borrowers can take a home loan insurance policy. This policy, adjusted within the pre-paid EMIs, will cover the outstanding loan amount as per agreed-upon terms and conditions in case of any sudden tragedies. As explained by Bhatia, “A one-time premium is often paid, and the policy tenure aligns with the loan duration. It is highly recommended for borrowers, as it offers peace of mind and protects dependents from financial distress.”

Advantages Of Home Insurance

One of the biggest advantages of opting for a home insurance policy is its decreasing term value. This means that as you make payments on your loan, the insurance cost adjusts accordingly. As stated by Kanwar Bhatia, “The coverage reduces over time in proportion to the outstanding loan amount, ensuring that the insurance cost aligns with the liability. This makes it a cost-effective solution, tailored to the borrower’s loan repayment schedule while providing necessary financial protection.”

This type of insurance is not legally required in India but is a must-have for any home loan borrower. It can protect their family from losing their home in case of unexpected circumstances and prevent them from struggling with unmanageable monthly payments. Its premium payments can be adjusted as tax deductibles under section 80C of the Income Tax Act. While applying for this policy, the borrower must compare various financial institutions and banks’ features and insurance cover plans.

Each provider will offer varying premium costs depending on the services they provide, so always inquire about coverage for critical illnesses or disabilities, as well as the available provisions in the event of the borrower’s death. Overall, a home insurance policy will serve as a financial security blanket for both the lender and the borrower, reducing as the original loan amount decreases over time.

If you’re planning to take a home loan, don’t miss this must-read insight.

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