One of the most important goals to achieve in your life is to stand independent and have your own house. Often, fortune comes in with your hard work, and there remain no hurdles in your way to success. But sometimes, luck gives up, and your dreams seem to be standing on the edge of a knife. Although it might seem vague and hence, a challenging task to complete your goals, it is not impossible.
Even if your pockets are a bit light to support your own house, you can always avail a home loan after having a rough estimation of your expenditure using a home loan calculator. Although there are many things that muddle people up while opting for a home loan, one frequently asked question is whether buying insurance is mandatory or not.
No, It’s Not Compulsory at All!
“It is not mandatory to purchase home loan protection plans. Neither the law nor the regulatory bodies such as RBI or IRDAI have made the purchase of home loan protection plans with a loan mandatory. Purchasing an insurance plan is the sole discretion of the buyer and borrowers cannot be forced to purchase such plans,”- Adhil Shetty.
While taking a home loan, if your lender compels you to cover it with an insurance plan, do not fall for such false claims. Also, always use a home loan calculator to get the precise figures of the amount you must pay.
Why Do Lenders Suggest You Purchase an Insurance Plan?
Insurance for a home loan helps you cover the losses of unexpected events, for instance, the demise of the borrower, and protects his/her family from falling under the burden of repaying that loan. Yes, the lender might suggest you insurance policies for his benefits as well (commissions), but the scheme is not unfruitful at all.
Depending upon the home loan interest rate, if the added insurance seems affordable as well, it is better to cover your home loan than to put your family to adversity.
Single-Premium Vs. Annual Term Plans
Your lender might suggest you buy a single premium term insurance rather than the annual premium one. This way, most of the time, you have to pay less in a single premium plan than the annual premium one. Still, for your own sake, you must ask your lender to share the figures of both the plans for comparison. Tally your monthly EMI based upon your home loan interest rate and if, you still can easily purchase insurance within your budget, go for it.
Always remember that buying insurance is not something a lender can force upon you. It is your individual choice you must take following your budget and ability to afford it. And if you are willing to cover your home loan with insurance, study your lender’s policy well and then make a decision.