It is not mandatory for home loan borrowers to buy insurance on the same. Nevertheless, having such a policy in place can effectively protect a household in unforeseen circumstances.
Every potential borrower considering to avail a housing loan should check these advantages of such policies which are discussed below –
Protection of assets
Failure to clear a home loan can be damaging since it can lead to a financial institution seizing house to recover their losses by auctioning the property. Insurance policies, which cover home loans, can effectively protect these households if such a situation arises. They financially cover the loan repayment, thereby ensuring that the individuals are not evicted even if they fail to repay their housing loan.
Low premium charges
Typically, premium charges of home loan insurance policies are quite low compared to the high amount which they financially cover. This low premium amount makes this cover plans a feasible and convenient option to protect investments on a home. Typically home loans are high-value loan products, thereby failing to pay EMIs and consequently losing such properties can be quite adverse for a borrower’s financials.
Tax benefits
Multiple tax benefits are offered on home loans as well as insurance policies. While these plans provide mental peace since they financially cover the home loan repayment, borrowers can avail additional tax benefits on them. The regulations and exemptions come under Section 80C.
Before going on to avail a housing loan, borrowers should also consider insurance policies, which offer such features, and plan their financials accordingly.
