Skip to main content

HOME LOAN PROTECTION PLAN: A NEW IDEA TO SECURE YOUR LONG TERM LOAN


Your lender may insist on you Buying a Home Loan Protection Plan (HLPP) along with HL. They may also tell you that it is compulsory. But it is at your discretion whether to buy it or not.
Now, HLPP is an insurance plan that covers any outstanding amount of the HL in the event of your death within the loan tenure.
A bank may give you an option to club the premium amount with the loan amount.
How does an HLPP work?
HLPP works slightly different from rest insurance plans:
1. The insurer settles the loan with the bank in the event of your demise.
2. Excess funds, if any, after loan repayment is provided to your nominee.
Benefits of HLPP:
1. You will be eligible for tax benefits under Section 80C.
2. You can also opt for riders such as critical illness or disability rider. The premium will increase accordingly.
Demerits of HLPP:
1. HLPPs are expensive.
2. If you choose to club your premium with the loan amount you will not be entitled to any tax benefits because the bank pays the premium.
3. HLPP may or may continue to cover the HL in case you pre-close or transfer it to another bank.
Therefore, it is beneficial if your opt for Term Life Insurance. A sufficient Life Insurance is capable of paying outstanding loans, fund financial goals and provide for family’s regular expenses. Also, a single Term Plan covers all the borrowers of a joint loan. A single life cover is enough.
Term Loan is better than HLPP because:
1. It is cheaper than HLPP.
2. Whereas, life cover in Term Plan doesn’t change.
3. Term Plan cover continues even if shift your loan to another lender.
Some banks may offer a Term Plan instead of an HLPP. Don’t blindly accept the offer because premiums in such cases may be higher as insurance is a third party product. Lender will recover the commission from you. Therefore, compare other Term Plans before you go for it.
It is advisable. Since a HL is a huge liability it is always advised to cover it with an insurance.
It might sound like an extra expense, but in the event of a mishap insurance will cover the loan leaving the property debt free for your family.
In case it is not covered with insurance and after the mishap your family is unable to cope up with the EMI of the loan they might end up losing the property to the bank.

Labels:

Comments

Post a Comment

Popular posts from this blog

A COMPREHENSIVE GUIDE TO APPLYING FOR A USED CAR LOAN ONLINE

In today's fast-paced world, possessing a car isn't simply an extravagance but a need. For many, a used car is a magnificent choice to satisfy their transportation needs without breaking the bank. Notwithstanding, financing a used car purchase could appear to be daunting. Fortunately, to apply for a used car loan online has become a convenient and accessible choice. Here is a comprehensive guide to navigating the process without a hitch. Understanding Used Car Loans Before jumping into the application process, it's crucial to grasp the fundamentals of used car loans. These loans are specifically designed for purchasing pre-owned vehicles. Lenders offer varying terms and interest rates based on factors like credit history, upfront installment, and the vehicle's age and condition. Preparing for the Application 1. Know Your Budget: Decide your budget by assessing your financial situation. Consider factors like a month-to-month income, existing expenses, and potential init...
Post a Comment
Read more

A COMPREHENSIVE GUIDE TO AVAILING A LOAN ONLINE

In today's fast-paced world, the ability to get financial assistance rapidly and helpfully has turned into a need for many. While, you " AVAIL A LOAN ONLINE " offers a seamless answer for meeting various financial requirements, whether it's for education, starting a business, or dealing with startling expenses. Here is a comprehensive guide to navigating the process successfully. Understanding Loan Options Prior to plunging into the online loan application process, it's crucial to understand the sorts of loans available. Whether it's personal loans, business loans, or mortgages, each fills various needs and accompanies varying interest rates and repayment terms. Assess your requirements and financial situation to decide the most suitable loan type. Research and Comparison Whenever you've recognized the kind of loan you require, research various lenders. Various financial foundations, banks, and online lenders offer loans. Compare interest rates, repaymen...
Post a Comment
Read more

GUIDE TO BUYING A USED CAR: FIGURING OUT INTEREST RATES

As of now, in the fast-paced universe of today, possessing a car is neither a luxury nor a need. While considering the practicality of purchasing a used car, the vast majority of individuals arrive at this resolution. In any case, financing such a purchase can be troublesome. This blog aims to impart information regarding the intricacies of used car loans, with a particular emphasis on the critical component of interest rates. What is a Used Car Loan? A " Used Car Loan " is a financial product designed to assist individuals with the expense of purchasing cars. A used car loan, in contrast to a conventional car loan for another vehicle, is designed to accommodate the extraordinary circumstances associated with purchasing a used automobile. Factors Influencing Used Car Loan Interest Rates 1. Credit Score: An essential part of loan applications, the credit score significantly impacts the interest rate determination process. Individuals must maintain a decent credit history bec...
Post a Comment
Read more