Do You Need Insurance On Home Loan?

When taking a home loan in India, there are several types of insurance policies that are available to borrowers. These policies provide coverage for different types of risks that can be associated with home ownership.

It is important to note that while some of these insurances may be mandatory when taking a home loan, others may be optional. It is important for borrowers to carefully review the terms and conditions of their loan agreement to understand what types of insurance are required, and to consider optional coverage as needed to protect their investment in the home.

Home loan insurance, also known as mortgage insurance or mortgage protection insurance, is a type of insurance policy that provides financial protection to homeowners in the event that they are unable to make their mortgage payments due to unforeseen circumstances, such as death.

Home loan insurance can be purchased at the time of taking out a mortgage loan or at any time during the term of the loan. The cost of the insurance will vary depending on a number of factors, such as the amount of the mortgage, the length of the loan term, the age and health of the borrower, and the type of coverage selected.

It must be noted that this insurance is not mandatory and no lender can force you to buy a policy when availing a home loan.

Property insurance: This insurance is mandated by several banks. However, the borrower may choose to get the asset insured from any insurance company of his/her choice.

For example, SBI mandates that the house/flat is insured comprehensively for the market value covering fire, flood, earthquake etc. in the joint names of the bank and the borrower. Cost of the same is borne by the borrower.

Types Of Insurances Available With Home Loan

According to SBI Home Loans (https://homeloans.sbi/), term insurance product is offered by SBI Life Insurance Company which offers financial coverage to the term life insurance policy holder for a specific time period. In case of death of the insured individual during the policy term, the death benefit is paid by the company to the beneficiary. This is an optional insurance.

On the other hand, property insurance is offered by SBI General that covers private residences and protects them from unpredictable damages and natural disasters. This is mandatory insurance.

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