Do we need to buy Home loan insurance if already having a term insurance?
Do we need to buy Home loan insurance if already having a term insurance?
Prabhu Kumar (11 Points)
21 March 2023
2 Replies
saranraj
(CA FINAL)
(419 Points)
Replied 21 March 2023
Term life insurance covers only the risk of death. But home loan insurance not only covers the risk of death but also covers any damages to your house (inner and outer), loss of employment etc.
Sophia James
(9 Points)
Replied 23 March 2023
Whether or not you need to buy home loan insurance if you already have a term insurance policy depends on your individual situation and financial goals.
Home loan insurance, also known as mortgage protection insurance, is designed to cover your home loan payments in the event of your death or disability. It typically covers only the outstanding balance of the loan and is often sold by banks or lenders at the time of taking a home loan.
On the other hand, term insurance provides financial protection to your family in the event of your untimely death. The policy pays out a lump sum to your beneficiaries in case of your demise during the policy term. The policy benefits can be used for any purpose, including paying off a home loan.
If you already have a sufficient term insurance policy that can cover your home loan payments in the event of your death or disability, you may not need to purchase home loan insurance. However, if your term insurance coverage is not sufficient to cover your home loan or if you want to ensure that your home loan payments are covered separately, then you may consider buying home loan insurance.
Ultimately, it's important to evaluate your individual financial goals and obligations when deciding whether to purchase home loan insurance or rely on your existing term insurance policy. Consider factors such as the outstanding balance on your home loan, your family's financial needs, and your overall risk tolerance.
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