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POSTED BY ON March 3, 2013 9:24 pm COMMENTS (21)
Hi All,
I have got home loan sanctioned from SBI of Rs 45,00,000/- for 25 yrs tenure(Single borrower). I want to know that :-
1) Is it mandatroy or optional to take the risk insurance policy for loan securtiy as per IRDA or RBI rules as SBI is pressing me to take this SBI Life- RiNn Raksha policy whose premium is ~1.51 lacs.
2) If mandatory, what will be one time premium amount for SBI Life-RiNn Raksha Policy ? How it is calculated ?
3) If there any option to pay one time(Single) or I have to pay 5 yearly instalments or 300 monthly installments.
4) Is there any other insurance policy of any company that is more suitable and cheeper for me. Please advice as early as possible.
Thanks !!
Prashant Shukla
2021 © Jagoinvestor.com All Right Reserved
Dear Prashant, there is nothing called best. My best can be worst for you & your best can be worst for me. Please focus on selecting the plan as per your needs. While declaring about your health, job, family history, drinking habits, smoking etc. declare each & every thing honestly.
Thanks
Ashal
Dear Ashish, Please look at the discussion in totality. I’m agree here with dear Ramesh for the actual need than the ‘should’. Please do check your expenses, income, assets (do not include this new to be purchased house) & investments, future financial liabilities. Then decide how much is too much for both of you.
Thanks
Ashal
Exactly.
Dear Ramesh / Ashal,
After going through the whole discussion, (including query raised by Mr. Prashant) and also what all insurance policies I have right now, I will take a decision.
I am trying to optimise the life insurance, which anyways has a few unfruitful policies taken without any understanding and from the point of view of saving tax. Once I cut down these policies either by discontinuation or making them paid up, I can easily fit in additional plans, if need be.
Appreciate your guidance.
Regards,
Dear Ashish, take your time but certainly not a life’s time. 🙂
Thanks
Ashal
Dear Ashal,
Thanks. I would look into it and increase the cover accordingly. Presently I have Aegon Religare i-Term (1Cr) and HDFC Click2Protect (50 Lakh). I am thinking of adding either Aviva or Bharti Axa.
Regards,
Thanks Ramesh, I will definitely take a look on the Aviva i-Term and asks further questions if i will have any. Thanks guys for your time !!
Dear Ashal,
Self: 16.50 Lakhs
Wife: 14..42 Lakhs
Dear Ashish, for the quoted income figures – You should have a Term cover of 2.4 Cr. + 45L Rs. from Home loan. Which is around 3Cr. Rs. well below your 20 times multiple of yly income.
Similarly for your wife, there should be a term cover of 2.1Cr. + 45L Rs. home loan = 2.5Cr. Rs. which is again well be,ow the 20 times multiple.
Thanks
Ashal
@ Ashal,
Why “should”? “Can” is ok.
I would say, their overall Risk of Income Replacement is Decreased and not Increased. So they can have lesser amount of Covers, since both are working.
Dear Ramesh,
Request if you can please elaborate on the statement that
“their overall Risk of Income Replacement is Decreased and not Increased. So they can have lesser amount of Covers, since both are working.”
Does this mean that since both of us are working, we may still work out with current or little addition in insurance instead of adding about a crore?
Thanks.
As a general statement, you need LESS term insurance cover, if both husband and wife are working AS COMPARED to only 1 working.
But it depends on a lot of factors. Best way is to run some what-if scenarios. Eg
1. What if You die, how will that affect the income and assets of your wife? And how will she sustain herself with the insurance money + her income + payment of the liabilities for rest of the her life, including future major expenses, etc.
2. Then do a run off of this kind, for the scenario, in which your wife dies.
You will CERTAINLY find that if wife is working, the insurance money required is ALWAYS lesser than if she is not working.
The various rules of 15-20x of annual income come because of the fact that usually you need the Inverse of 15-20, which equals 5-7% for reasonable income generation.
Dear Ashal,
Thanks. I would look into it and increase the cover accordingly. Presently I have Aegon Religare i-Term (1Cr) and HDFC Click2Protect (50 Lakh). I am thinking of adding either Aviva or Bharti Axa.
Self:
Bharti Axa e-protect: Premium Rs.6180 for 50L and Rs.11461 for 1Cr
Aviva i-life: Premium Rs.6360 for 50L and Rs.11737 for 1Cr
Spouse:
Bharti Axa e-protect: Premium Rs.4888 for 50L and Rs.8876 for 1Cr
Aviva i-life: Premium Rs.5621 for 50L and Rs.10247 for 1Cr
Any suggestions from your side on this.
Regards,
Dear Ashish, May I know the yly income for you & your wife?
thanks
Ashal
Dear Ashal / Manish,
Ever since I came to know about jagoinvestor.com, I have become an avid reader of this forum. Whenever I get time of 15-20 minutes in day I try and read questions that are also relevant to me.
I really appreciate the way queries are being answered. In one of my earlier question I had asked on future course of my financial planning and got very sincere response.
Similar to above question asked by Mr. Prashant, I laong with my wife, have taken a joint home loan of 90 L from HDFC (share of 50% each) and they are suggesting me to buy some insurance plan which shall cover home loan liability, coverage for critical illness, job loss etc. or another option is pure home loan cover. Their premiums are comparatively high if I consider the regular online term plan available in market.
I was wondering should I go for a pure online term plan instead of the above suggested by HDFC or look at their suggestion by including job loss, CI etc.
Also, is there any limit on life insurance that a person can be covered. For example, I have already taken term plan worth Rs.1.5 Cr and for my wife its 1 Cr. So if I add another 50L to each of us via a term plan to cover home loan liability, will I get it easily or an Insurance company can deny on the grounds of over insured or something.
Need your advice.
Regards,
Ideally you should get 20 times of your yearly income , a little bit here and there.. if it goes beyond that point , It looks like you are using INSURANCE as money making tool after your death , rather than using it as security tool.
So you can take additional cover, provided you can justify its requirement .
Now coming back to your policy related question . Its in your favour if you cover the loan so that incase one of you are not in this world, the other person can use the insurance money to pay back the debt part . Now the best thing to that is using a plain vanila term plan . But these home loan companies use the moment to sell you these policies .. and at times go to the extent to saying that its mandatory and there is no option for you .. the only thing which can be mandatory is the HOME INSURANCE , I mean covering the house from earthquake, flood and fire etc .. which comes at a very small cost .
Other than that there is nothing which is COMPULSORY as per IRDA rules, however taking an extra life cover from outside is suggested for your own good.
Good luck !
Manish
Is there any best available term loan policy available in market which have maximum risk coverage with minimum one time premium? Please let me know if someone already had been in tío my shoes earlier.
Aviva i-Term has an option of One-Time Payment option. check that out.
Thanks a lot Ashal !! I will definitely do some resarch on term plans available in markets.
Read this and you will understand whats going on http://jagoinvestor.dev.diginnovators.site/2012/12/forced-selling-with-home-loan.html
Dear Prashant, the policy in question is not all mandatory. it’s a ploy to cross sell insurance of sister co. Yes SBI may ask you to cover your life adequately to safeguard it’s interest in your life till the loan is running. If you want to go within SBI, instead of this Rin Raksha, please opt SBI Life’s Smart Shield Level Term cover of 50L or 75L or 1Cr. as per your actual term cover need (more than the loan amount).
You may purchase the term cover outside of SBI Life, but be ready for some non-cooperation from SBI staff in your home loan.
Actually As per RBI guidelines, no bank can force you to purchase any bundled life insurance policy with any of it’s loan products.
thanks
Ashal