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POSTED BY ON February 13, 2014 1:21 pm COMMENTS (4)
Hello Sir,
My name is Sabeesh. K. K and is hailing from Kozhikode, Kerala. Recently I have sanctioned with a Home Loan of Rs. 14,13,000 from SBI, Kozhikode RAASMEC Branch. When I reported for signing the documents the Manager of the section told me that, a Life Insurance of Rs. 63,000 is mandatory which will be deducted from my loan amount and the remaining amount of Rs. 13,50,000 only will be give into my hand and they compelled me to sign the same too. I was unaware that the Life Insurance is not mandatory and signed the documents for this insurance also. Later I have received a first stage amount of Rs. 2,50,000. Now what can I do to withdraw the Life Insurance.
Also I have already paid an amount of Rs. 13,377 as Property Insurance. Is this legal?
Please reply me,
Sabeesh. K. K
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Dear Sabeesh, please check with SBI Life insurance for your policy. If it’s still in processing stage you can cancel the policy. In case it has been dispatched to your address, you can cancel the same after receiving it within 15 days free look period.
Thanks
Ashal
Banks generally make it compulsory to take a property insurance but life insurance is optional. In both cases, the insurance documents rest with the bank until your loan is active. The insurance documents mention the banks name so that in case of an eventuality, they can easily recover the money from the insurance without any intervention from the borrower or his family.
In your case, you have got a lesser loan amount and they have adjusted the life insurance premium with the loan amount. They could also have added the life insurance premium to the loan amount. Look at it in the following ways,
1. Life insurance cover for your loan is not a bad thing if you personally do not have any term cover. Take it as added protection.
2. If you already have term cover, it may not be very useful to you. If you would have asked SBI to give in writing that it is mandatory, they couldn’t have given it. If you feel you have been misled, you can challenge SBI in writing and threaten to involve the banking ombudsman. Did the loan sanction letter mention that life insurance is compulsory? Check again.
3. they could have given you the option of paying the insurance premium separately instead of deducting it from your sanctioned loan amount or adding it to your loan amount.
Dear Sabeesh, had you received the life insurance policy or not?
Thanks
Ashal
No.