Home loan insurance is also commonly known as Home Loan Protection Plan (HLPP).
In term plans where you have to pay premiums at regular intervals.
Whereas in HLPP, you have to pay a lump sum amount as premium.
Mumbai. Everyone’s dream is their own home. Also, it is a big financial step in life. After much planning and deliberation, the man decides to take home. It is important to consider all aspects like loan interest rate, processing fee, EMI timings before buying a home. When you buy a house, along with its security, you also have to provide security for the repayment of the home loan taken for the house.
There are two options in front of us in terms of home loan security. First – term policy and second – home loan insurance. Home loan insurance is also commonly known as Home Loan Protection Plan (HLPP). Let us know that after taking a home loan, which option is better for you related to its security?
cost of premium
The most important factor in deciding whether you should go for a term plan or HLPP for home loan security is the cost of premium. While in term plans you have to pay premiums at regular intervals, in HLPP you have to pay a lump sum amount as premium.
Because of this you have to pay higher premium in HLPP. Generally, a term plan of Rs 1 crore for a young person is available for a premium of Rs 8000 to 15000, whereas for a cover of Rs 1 crore in HLPP, you may have to pay up to Rs 50,000.
On the death of the person taking a term plan, his family gets the sum insured. In this situation, the family can repay the home loan with this amount. They can also meet the rest of their financial needs. Many such term plans are now available in the market, in which even after the end of the term of the insurance, if the person buying the insurance survives, then he gets some benefits.
In comparison, the functioning of the HLPP is complex. It covers the amount of the home loan. In this situation, the company selling the HLPP pays only the home loan amount to the bank in case the person is no more. Once the home loan amount is repaid, the liability of the company ceases.
pros and cons of change
Home loan refinancing or changing its tenure is a common practice these days. If you take a term plan, then the cover amount can be changed according to the change in your financial liability. Once the premium amount is paid in HLPP, there is little scope for any change.
If you increase the tenure of the home loan from 20 to 25 years, then the validity of your HLPP will remain for 20 years only. Similarly, even if you reduce the tenure of the home loan, you will not get any relief in your premium amount in HLPP.
home loan real Income Tax It’s a great way to save. The tax benefit under section 80C of the Income Tax Act can be availed on the principal portion of the Home Loan Monthly Installment (EMI). In HLPP, since the premium amount is also included in the loan itself, hence no separate tax benefit can be taken on it. In a term plan, you can get separate tax benefits on the annual premium.
FIRST PUBLISHED : August 04, 2022, 15:45 IST