How to Protect Your Home Loan with Term Insurance?

Home is a dream which everyone sees with equivalent enthusiasm. And why not? It is a symbol of stability and testament to hard work that one does. However, no doubt it demands substantial financial commitment that has to be promised in terms of monetary supply. Seemingly, while owning a home is a rewarding experience, it’s equally important to protect this investment for your family. But how? Well, this is where term insurance steps in as a crucial financial safety net.

Importance of Term Insurance

The insurance policy, designed to provide financial protection for a limited period of time, is generally called term insurance. Term insurance is not like ordinary life insurance, giving maturity benefits; it rather pays in bulk in case the policyholder unfortunately dies anytime during the policy term.

Also Read: How much term insurance cover do I need?

Why Term Insurance is Important for Homeowners

A term life cover helps protect the house you’ve built for your family through your hard work and effort, especially if something unfortunate happens and the main earner passes away. With term insurance, your loved ones can use the insurance money to pay off the remaining home loan. This ensures they can continue living in the same house without the burden of a significant debt.

Knowing your family will be okay money-wise even if you’re not around gives you peace of mind. Many people find this hard to achieve. If something unexpected happens, it helps your family with much-needed money.

In today’s busy world where inflation keeps hiking up, term insurance is a cheaper insurance plan to buy. This makes it a good choice for people who have financial responsibilities like home loans and want to protect what they own.

How Much Term Insurance Coverage Do You Need?

Figuring out the right amount of term insurance coverage is key. Here’s a basic guide:

• A Backup for Home Loan Repayment

Term insurance can also serve as a safeguard in case of any unforeseen circumstances affecting the home loan repayment. It offers an option to settle outstanding debts including home loan, provided the insured sum equals or exceeds the outstanding loan amount.

• Extra Coverage:

Think about adding a safety net to the insured sum to handle other money matters like daily costs, kids’ schooling, or other debts.

• Check Often:

As your loan shrinks and money responsibilities shift, look over your term insurance coverage to make sure it fits your current needs.

Also Read:Factors to consider while buying Term Life Insurance

Picking the Best Term Insurance Plan

Choosing the Best Term Insurance plan requires considering a few factors:

• Policy

The policy should at least be concurrent with the home loan, or a little beyond that to provide additional coverage.

• Sum Insured

Your outstanding house loan and other debt liabilities should be the basis for arriving at the sum insured.

• Additional Policy Features

Few policies will let you add extras, like serious illness cover or benefits in the event of death or disablement due to an accident. Consider whether you need these, based on your needs and your ability to pay for them.

• Leverage Your Policy for Loans:

Term insurance policy can be used as a collateral for a loan, allowing lender to claim the policy benefit in case of default.

• Cost

Prices from different insurance companies should be compared to get value for the money.

Conclusion

This might seem like an expenditure additional to the one paid for buying insurance, but actually, it is an investment for your family’s future. The sense of security that one has by being prepared for the contingency offsets the initial cost incurred.

Want to know your options? Call now at 1800 266 9693 or mail at support@elephant.in. Want to know more about how to protect your vehicle? Log on to Elephant.in to know more about our extensive car insurance plans!

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.| EL/BLOGS/24-25/15