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

EXPLORING OFFERS AND OPPORTUNITIES OF USED CAR LOAN

Many individuals instantly consider purchasing a brand-new car when they are thinking about buying a vehicle. The used car market has, by and by, as of late, acquired colossal traction. The availability of used car loans and the alluring motivating forces they give that may be of some value are two important factors adding to this development. In this article, we'll dive into the importance of used car loans and investigate some alluring " Used Car Loan " options that could be useful to you to make a financially wise choice while purchasing a pre-owned vehicle. Why Opt for a Used Car Loan? 1. Cost-Efficiency: For individuals hoping to purchase a vehicle without failing, used car loans are a financially mindful decision. While used cars have already encountered this early depreciation, new cars can lose as much as 20-30% of their value in their most memorable year. In this sense, used cars offer better value for your money, and a used car loan can assist you with getting
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

THINGS TO KNOW ABOUT BUSINESS LOAN AND BUSINESS LOAN INTEREST RATES

Admittance to suitable and sufficient financing can distinguish between a business flourishing or battling to remain above water in business ventures. Business loans have arisen to help businesses, giving the fundamental money for development, extension, or even conquering financial obstacles. Here, you will investigate the universe of business loans, with a sharp spotlight on business loan interest rates, assisting you with pursuing informed choices for your endeavor's financial future. Understanding Business Loans Business loans are financial instruments intended to give organizations the capital they need to operate, develop, or address prompt financial necessities. These loans can be utilized for different purposes, like beginning another endeavor, expanding an existing one, purchasing equipment, covering operational expenses, or refinancing existing debt. Business loans are regularly presented by banks, credit unions, online lenders, and other financial institutions. The terms
Post a Comment
Read more