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POSTED BY ON March 20, 2014 8:11 am COMMENTS (4)
Recently i had purchased a flat by taking home loan from canfin bank.He has not asked me for any insurence charges.my doubt is that whether home insurence is required for flat which is under home loan or not.is it will be beneficial for me if something occurs during the period of home loan.if it is so,which home insurence will be better for lifetime.
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Dear Kalyan, it’s in your own interest to purchase home insurance for your flat. In case something happens to building due to any natural calamities, the home insurance ‘ll come to your rescue.
Thanks
Ashal
What is that “something” that may occur?
Usually if you take a big loan, taking an insurance to cover that is a good thing. Lets see what you can cover,
1. Cover for life. What if something happens to loan applicant. How will dependants pay off the loan.
2. Cover for total or partial disability. What is loan applicant loses an arm or leg in an accident which impairs his ability to work, thus impacting the loan repayment.
3. Cover for critical illness. What if loan applicant is diagnosed with a critical illness which prevents him from working or results in death.
4. Property insurance
What you can do,
1. Buy all in one plans like Home Safe Plus from ICICI Lombard. It will cover all the above but premium will be something like 1.5L for 5 years. I my opinion this is too expensive.
2. Take a term plan for at least the amount of home loan. But you should have a term plan anyway.
3. Take an accidental policy which will cover death by accident, total and partial disability etc.
4. Take a critical illness cover. This will cover some 11-13 critical illnesses
Which covers you take depend on your risk appetite. If you think that even in your absence your dependants can pay off the loan, there is no need to go for each and every cover. A term plan and property insurance should be enough.
Term plan till the age of retirement and property insurance for 10-20 yrs. These will continue even after your loan is repaid.
thanks raja for ur information.actually my doubt is that if i take home insurence for the flat which was taken under loan,if any calamity happens then for whom the insurence company pays?for me or the bank from which i had taken loan.
Kalyan, look at it this way. As long as you have a loan on your property, the property technically belongs to the bank. You are just the care taker till you pay off the loan. So any proceeds of home insurance will go to the bank. However there are 2 things here,
1. Some banks ask you to take home insurance while sanctioning the loan. In such cases, the home insurance has your name but it is in favor of the bank in case something happens to the property. i.e. Bank is the claimant
2. If you have bought a home insurance on your own, it will be in your name, however in case of any disaster, you will anyway have to pay the loan to the bank, so in a way the claimant is still the bank.