Term insurance protects your family financially after you. It offers an affordable way to secure a high life cover` for your loved ones and help them cater to their financial needs in your absence.
Term insurance can help your dependents cover a wide range of expenses, such as daily essentials, higher education and marriage, as well as your outstanding debts, such as a home loan.
What is a Term Insurance plan for a Home Loan?
A term insurance plan for a home loan offers a high sum assured that can cover costs as high as a home loan. In your absence, the responsibility to repay your debts falls on your family members. Therefore, it is important to leave them with financial support that can help them settle the loan and protect your home from being taken over by the lender as collateral.
Buying term insurance for home loan coverage helps you secure your house and provide for your loved ones after you.
What are the benefits of buying Term Insurance for a Home Loan?
Below are some benefits of buying term insurance for home loan protection:
Peace of mind
Having term life insurance for home loan protection ensures your loved ones will have enough funds to repay the loan in your absence without any financial stress. With lump sum and regular income options, term insurance allows your family members to settle the home loan either with an upfront payment or as per its original repayment schedule while protecting your house.
Large cover at affordable rates
A home loan is a financial obligation that requires substantial savings to repay. Term insurance for a home loan provides high coverage, which can be used to repay the loan and address other financial needs in the event of unforeseen circumstances.
Protect your loved ones
A term insurance plan for a home loan ensures your family is not burdened with home loan debt. It enables them to maintain financial stability and protects their financial interests.
Benefits and add-on riders
Apart from the death benefit, term life insurance for home loans also offers additional benefits like riders. You can purchase these add-ons riders to enhance the plan’s coverage.
Tax Benefits
Get tax benefits on the premiums paid for buying term insurance. You can claim a deduction of up to ₹ 1.5 lakh per annum subject to the conditions prescribed under Section 80C* of The Income Tax Act, 1961. Moreover, the payout is tax exempted subject to the conditions prescribed under Section 10(10D)* of The Income Tax Act, 1961, ensuring your family can use the entire money to repay the outstanding home loan.
How can a term plan help you secure your home loan?
A term insurance plan provides financial protection for a specified term. In case of an unfortunate event during the term, the plan pays the nominee the sum assured either as a lump sum or as regular income. This money can then be used to repay the home loan, ensuring that your family is not burdened with the debt.
For example, consider Gautam, who bought a house with the help of a home loan amounting to ₹ 50 lakh at the age of 28. At 30, he purchased a term insurance plan with a sum assured of ₹ 1 crore and a tenure of 30 years. Tragically, five years later, Gautam passes away. His family receives a lump sum payment of ₹ 1 crore from the term insurance plan. They can now pay off the outstanding loan and use the remaining money to cover other financial needs, thereby securing their financial future.