Home Loan Insurance + Term Insurance

POSTED BY Prasad ON February 26, 2012 10:28 am COMMENTS (8)

Hi,
I have taken a Term Insurance for 50L from SBI
Also I have a Home Loan of Rs15L, also from SBI
.
Now the question is, should I go for Home Loan Insurance?
Will my term insurance be enough to cover my home loan too?
Or should I be more cautious?
.
Term Insurance Premium – Rs. 12K/year
Home Loan Insurance Premium – Rs. 35K (or installment Rs. 7K per year for 5 years)
.
Please advise.

-Prasad

8 replies on this article “Home Loan Insurance + Term Insurance”

  1. Prasad

    A lot of people ask question , they feel great and happy and they are lost in life again. If you dont take action fast and act on advices , you will also be one of those and there will be no use of this discussion . So I would really invite you to be action oriented and take this task of taking additional sum assured as a high priority project in your financial life and act on it .

    Please think your self accountable to all of us and finish and update all of us on your task . We are there to support you ! 🙂

    Manish

  2. Dear Prasad, Please keep us updated for the choice of your new cover & sum assured & insurer etc.

    thanks

    Ashal

  3. Prasad says:

    Thanks friend.
    I’m really happy that I joined the right forum.

    The insurance agents (at least whom I’ve seen) never gives such kind of advice.
    (maybe they are interested in filing their pockets)

    Let me do a re-planning now.

    regards,
    Prasad

  4. BanyanFA says:

    Hi Prasad,
    Try to compare the difference between Home Loan Insurance and Term Insurance. Generally Home Loan insurance incorporates an element of income protection which makes them expensive.

    At your level of income, Your Home Loan is not that material to set a scare. However, you need to find out if your Term Loan covers all your liability + Home Loan. You may realise that either it is sufficient or you may have to bump up its value.

    Regards
    BFA

  5. Dear Prasad, for the data given by you, your Term requirement is around 1 Crore. How?

    For 9L Rs. yly income, @ 10 times multiple, your basic cover comes out around 90L Rs. Add the Home loan liability, & it goes to 1.1C Rs. Now adjust the current value of your assets & investments, your cover requirement is around 1.02C Rs.

    That’s how, your cover should be around 1 Crore Rs.

    You already have a term cover of 50L Rs. from SBI. So your short fall is just 50L Rs. Now you have the option to either purchase another cover of 50L Rs. from the choice of your insurer or purchase a big single cover of 1C Rs.

    thanks

    Ashal

  6. Prasad says:

    Hi Bharat,

    Its Rs35k/20yrs, effectively Rs1.5K/year for 15L HomeLoan.

    Hi Ansal,

    1. Your age – 31
    2. married or not – Married
    3. size of family – 4
    4. Spouse’s income if any – None
    5. No. of dependents – 3
    6. your yly income – 9L
    7. your mly/yly expenses – 6L
    8. your current liabilities including this home loan – 20L
    9. your current assets & investments – 8L
    10. Tenure of home loan – 20yrs

  7. bharat shah says:

    i think, even you prefer to be more cautious, with figures you gave for premium, it would be better to have additional term insurance of 15 lacs with a longer term than your home loan period, say for 20 yrs, that may cost rs.6000 per year and may stop paying premium on completion of loan period .it would be cheaper.

  8. Dear Prasad, As the query is for Insurance purchase, May I know the answers of following questions –

    1. Your age
    2. married or not
    3. size of family
    4. Spouse’s income if any
    5. No. of dependents
    6. your yly income
    7. your mly/yly expenses
    8. your current liabilities including this home loan
    9. your current assets & investments
    10. Tenure of home loan

    Thanks

    Ashal

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