Ask yourself – 5 Questions about Home Loan Insurance.

Q1. What is home loan insurance? Is home loan insurance and house insurance same?

Home Loan insurance or insurance on home loan supports your family in any unforeseen event by paying the outstanding loan amount. Home loan insurance is an insurance term plan provided on your home loan amount for the same tenure like your home loan. Now in India, home loan insurance is made compulsory by all the lenders while opting for the home loan. Team Loanyantra can suggest you the loan products with low home loan interest rate as well as  home loan insurance low premium products.

Before that we should know that house insurance is totally different from home loan insurance. With regard to home loan insurance, you get the home loan insured whereas with house insurance, you get the structure of the house and the contents of the house insured.

Q2. How does Home loan insurance work? Will the home loan insurance cover reduces over the home loan tenure?

“A loan insurance plan covers the balance to be paid in case of the borrower’s death as per the loan schedule decided at the time of taking the policy,” says Rituraj Bhattacharya of Bajaj Allianz Life Insurance.

The home loan insurance offered by the loan cover will progressively come down as the home loan gets repaid. For instance, by the 10th year, if the loan cover would have been to be Rs 13.5 lakh. By the 14th year, it would have been reduced to about Rs 3.5 lakh.

Q3. How to pay the home loan insurance premium ?

To calculate the home loan insurance premium, primarily, the home loan interest rate is taken into account. A few companies or financial lenders also have a different rate for metropolitan and non-metro areas.

The other factors considered are, the age and medical record of the policy holder, the loan amount and the repayment period. The larger the loan amount or the repayment period, the higher the premium.

The home loan insurance premium payment can be paid at once or annually. You can either choose, 3,4,5,7 or 10 year, not exceeding 2/3rd of the loan term. For example, if you have to pay a premium of Rs.50,000 and choose to pay annually,  the bank includes that premium into your loan amount and calculates the EMI. So be wise and diversify your funds.

home loan insurance _loanyantra

Q4. What are the tax benefits while paying the home loan insurance premium ?

Only, if the premium is paid by you, and not by the lender, you are eligible for tax deduction under Section 80C and Section 10(10D).

If it has been paid by the lender and is part of the loan which you will repay through EMIs, it will not be possible to claim deduction.

Infact, the tax benefit is very negligible. The tax limit is Rs. 1,50,000. So, when you choose to pay annually, the premium is spread across your tenure which is added in your EMI. Understand that you don’t lose much.

Q5. What are the other options to insure your home loan? 

Usually home loan insurance is compared with insurance term plans. The main advantage with term plans is they cover other financial needs along with the home loan. However, whether you opt for a home loan insurance or choose any other term insurance plan, the premium is calculated accordingly, which can be higher for higher cover.

But now in India, it is mandatory to opt for the insurance for any loan you take. So, you can only opt whether you pay the premium directly or pay the premium through EMIs. 

NOTE :  Why should you opt for Home loan insurance?

The solution lies with you. But, the best advantage with home loan insurance is, incase of unexpected happening to the borrower, the insurers go to the bank directly to close the loan. The family need not go around the banks or insurance companies. So, for those whose family does not have much exposure about these financial matters, it is a good decision by the lenders to make it mandatory. So, plan smart and choose the best fit.

Home insurance – Know about it in detail!

A small girl asked her teacher the difference between a house and a home. The teacher made her understand – A house is made of walls and bricks. And if that house is filled with love, care and warmth, it is called a home.

A mom always thinks of making the relations special by making great memories. A dad supports her ideas by providing everything needed. Whether it is a nice couch to be a couch potato and enjoy the leisure time, or a PC table to finish the work, or a well furnished kitchen and rooms to keep things tidy. If there is an incident that might cause loss of house, what will you be left with?

No doubt the memories spent in that house remain in the heart. But, to make more of such memories in another house, opt for a house insurance. Loss of house and the content in the house should open doors to afford another one.

Householder’s Insurance Policy or home insurance is specially designed to meet the insurance requirements of a householder by combining, under a single policy, a number of standard policies usually taken by householders.

Who should buy Home Insurance /Eligibility Check  For Home Insurance

Irrespective of the fact that whether you are a tenant or an owner, buying home insurance should be your top priority.

  • Owners of the house can insure home and contents of the home.
  • Tenants of the house can insure contents of the house.
  • Authorized Member of the apartment or association society to insure common areas and utilities of the area.
Types of Home Insurance

Home insurance can be taken for different purposes.

  1. For House alone.
  2. For Contents in the House (Like furniture, electronics)
  3. For house as well as contents of the house.
home insurance
Home Insurance – Customize your plan by insuring your home, the structure, as well as contents of the home

But before you go for insurance of any content in your house or for your house itself, all you need to do is just check the warranty and guarantee of the product. Also, know the depreciation value of your house before you choose a house insurance policy.

Inclusions in Home Insurance
  • Aircraft damage
  • Fire
  • Lightning
  • Riot, strike
  • Storm, cyclone, flood
  • Missile testing operations
  • Fire and perils cover
  • Earthquake Cover

The policy offers coverage against loss or damage to any of the insured property. However, many policies do not cover flood or overflow of the sea, rivers and lakes, due to earthquake.

  • Burglary and Theft Cover

The contents of home are also covered against burglary or theft. The coverage will also be extended to silver articles, jewellery, precious stones and other valuable items, provided these are kept in a locked safe within your home premises.

Additional coverage available in home insurance policies

Regardless of the type of ownership, you can specifically cover your precious household items under a home insurance package policy. Here is a breakdown of the things that you can include under the coverage.

Plate Glass(Fixed)

The glass and sanitary equipment which are fixed in particular places inside the home. However, the plan doesn’t cover movable glass equipment.

Home Entertainment (TV/Music System)

Home entertainment equipment like television and its accessories, cable or digital or /satellite television receiver, Video equipment etc.

Personal Computer –

The coverage is for mechanical and electrical gadgets and appliances that belong to you or your family members and up to 7 years in age. Expenses for damages of these gadgets is covered if the damage occurs inside your home due to mechanical or electrical breakdown.

Pedal Cycles

The wide range of additional coverage further includes pedal cycle owned by you or any member of your family along with the accessories of the cycle that has been permanently fixed.

Baggage

If your baggage is damaged due to accident during a journey, your expenses will be covered under a home package policy.

Personal Accident

This coverage encompasses both temporary and permanent disabilities. People those who stay indoors and affected by accident will only be covered.

Coverage for ‘All Risks’

Apart from these specific items, you can further insure your expensive belongings. In that case you have to submit the valuations of the items you want to insure. You can ask for coverage for jewelry, clocks, watches, furs, photographic equipment like camera and their accessories, musical instruments and sports equipment and their accessories.

Exclusions in Home Insurance

It is always recommended to go through the big list of documents before signing for any agreement or paying the home insurance premium.

But usual exclusions are –

  • Intended damage to the contents in house or to the house.
  • Pre damaged products or pre damaged structure of the house or existing damage to the structure of the house.
  • Manufacturing defects of the contents of the house.
Calculate the home insurance premium / Present scenario of home insurance in India

A home insurance plan, usually, covers the costs for rebuilding the structure, not the value of the property. Reconstruction costs do vary and for a no-frills structure the cost is around Rs 1,800 per square foot. It will cost around Rs 3,500 per square foot for a better construction. If you possess a 2,000 square foot residence you can insure your house for Rs 35-70 lakh. In that case, you have to pay Rs 2,100-4,200 for premium each year. You can reduce the cost by opting for a long-term policy with the tenure of 10 years. But you cannot predict the cost of construction, also most likely the expenses will rise after 10 years.

Tenure of Home Insurance

Home insurance policy usually known as term insurance policy also can be opted for short term or long term. Pay for one year and  can choose to renew every year and pay for multi-year which will reduce the premium amount. Choose the best-fit.

How to Lower Your Home insurance Premium?

There are many such things in our house which are precious to us but there is no point in insuring them if they are too old. The depreciation is to be considered.

Also, if you are setting up a house, you will surely have guarantee for all the things. It is advisable to take insurance after the guarantee expires. So be clever while taking the policy.

How to File for a Home Insurance Claim?

Almost every insurance company is having its own deadline within which you have to inform about your loss. These can vary between 7-15 days so make sure you do it as soon as possible. Some companies even let you do with an email or SMS. Before you file for a claim, you will have to lodge an FIR and the copy of which you need to submit with insurance company.

Tips for Choosing a Home Insurance in India

There are various home insurance providers in India that offer different plans as per individual needs.

  • Check premium and coverage : Firstly, evaluate risks which your home is facing or might face in  future. For example, if you live in a flood prone area then you should ensure that your home insurance policy is covering these risks also. Also, while checking coverage, it is prudent to check if the premium fits within your budget or not. You can solicit premium quotes of individual insurers or use comparison chart to compare premium quotes.
  • Check claim settlement ratio : A good company is judged by the turnaround time of settling claims. The very purpose of insurance will be defeated if you do not get a claim when it is required. So, it is worthwhile to check the claim settlement record of companies before zeroing in on one insurer.
  • Look at company’s reputation : The first and foremost characteristics of a good company is that it has customer friendly staff. Does your insurance company have competent customer service representatives who are capable enough to resolve your queries quickly? It is always important to choose a company who is well equipped to assist you at any point of time.

There is no denying of the fact that house insurance is a must, however, there are other benefits and riders to buying such a policy that will add convince you totally. Don’t wait for a calamity to remind you the need of buying a home insurance, opt for it beforehand!

Home insurance: A shield against loss/damage of property and valuables.

Home Insurance: A Shield Against Loss/Damage

A house is made of walls and beams; a home is made with love and dreams.”

There is no such place like home in the entire Universe. After all, it is a place where you and your loved ones can rejoice, weave thousands of memories that last for a lifetime. While we put our life’s savings into buying or constructing a home but we rarely realize that our home needs a protection in the form of insurance too. By investing in a good home insurance policy, also referred as homeowners insurance, you can protect your home from threats. Situations like burglary, fire, earthquake or destruction of house due to riots are quite common in India.

Don’t wait for a calamity to remind you the need of buying a home insurance, opt for it beforehand!

Top 5 Benefits of Home Insurance

There is no denying of the fact that house insurance is a must, however, there are other benefits and riders to buying such a policy that will add convince you totally. Have a look below: 

  • Get comprehensive coverage to both content and structure of your home.
  • Secure your assets from any mis-happening.
  • Buy home insurance policy at comparatively lower premium rates than other insurance policies. 
  • Reduce stress and tension level for you’ll have a home insurance to fall back to, in case of unforeseen circumstances.
  • Timely insurance payouts allow families to go through rebuilding process quickly, helping them to move on and get back to their normal daily lives.

Handy Tips for Choosing a Home Insurance in India

There are various home insurance providers in India that offer different plans as per individual needs. To ease your selection, we have listed down important points which should be compared while choosing one home insurance company over other:

  • Check premium and coverage= Firstly, evaluate risks which your home is facing or might face in a future. For example, if you live in a flood prone area then you should ensure that your home insurance policy is covering these risks also. Also, while checking coverage, it is prudent to check if the premium fits within your budget or not. You can solicit premium quotes of individual insurers or use comparison chart to compare premium quotes.
  • Check claim settlement ratio=A good company is judged by the turnaround time of settling claims. The very purpose of insurance will be defeated if you do not get a claim when it is required. So, it is worthwhile to check the claim settlement record of companies before zeroing in on one insurer.
  • Look at company’s reputation=The first and foremost characteristics of a good company is that it has customer friendly staff. Does your insurance company have competent customer service representatives who are capable enough to resolve your queries quickly? It is always important to choose a company who is well equipped to assist you at any point of time.

Inclusions 

Home insurance covers losses to the structure and content of your home due to natural and man-made calamities.

Fire and perils cover-

  • Aircraft damage
  • Fire
  • Lightning
  • Riot, strike
  • Storm, cyclone, flood
  • Missile testing operations

Earthquake Cover

The policy offers coverage against loss or damage to any of the insured property. However, many policies do not cover flood or overflow of the sea, rivers and lakes due to earthquake.

Burglary and Theft Cover

The contents of home are also covered against burglary or theft. The coverage will also be extended to silver articles, jewellery, precious stones and other valuable items, provided these are kept in a locked safe within your home premises.

Exclusions

  • Loss or damage caused by wear & tear and depreciation
  • Loss of cash
  • Loss or damage caused by war, invasion, act of foreign country
  • Loss or damage caused by nuclear war
  • Loss, destruction or damage caused to any electronic equipment due to over-running or excessive pressure

Who Should Buy a Home Insurance?

Home insurance is meant for anyone who has a home whether own or rented. There is myth that only home-owners should buy a home insurance plan. Let us tell you case of Mr Vijay Rao and how having a home insurance policy saved him during a crisis.

Two months after Mr Rao moved to a rented apartment in Mumbai, a catastrophic fire engulfed furniture and other appliances worth Rs 8 lakh. Thankfully, he had a home insurance policy and he could manage to settle back to normal life again easily and without any financial stress.

It’s a misconception that only house owners should buy a home insurance. Although, house may belong to a landlord but it has contents which belong to you. Irrespective of the fact that whether you are a tenant or owner, buying home insurance should be your top priority.

Even, there are various insurance companies which provide exciting discounts to people who have bought over 3 home insurance covers. However, don’t let discounts make you buying those covers also which you don’t need. For instance, if you are a landlord then avoid buying a policy to cover contents of the house. Leave that to the tenant. Companies also offer discounts if you buy it for a long duration. You can insure the house for up to 10 years, which not only gives peace of mind but you also get a chance to earn lucrative discounts.

How to File for a Home Insurance Claim? 

Almost every insurance company is having its own deadline within which you have to inform about your loss. These can vary between 7-15 days so make sure you do it as soon as possible. Some companies even let you do with an email or SMS. Before you file for a claim, you will have to lodge an FIR and the copy of which you need to submit with insurance company. Apart from FIR report, the other documents which you need to submit are-

  • Fire brigade report
  • Medical Officer’s Certificate for death or disability
  • Investigation report by police
  • Suppliers original invoice for replacement
  • Invoice of owned articles, if any
  • Repair estimates
  • Court summons

Note: This is an indicative list and you may be asked to submit other documents at the time of claim settlement.

How to Lower Your Home insurance Premium? 

Strategies that can help in bringing your home insurance premiums down are-

  • Reduce your liability by agreeing to share the burden of repairing. It will help in reducing your premium.
  • There are many such things in our house which are precious to us but there is no point in insuring them if they are too old. For instance, your 10 years old black & white TV might be working well, but there is no point in insuring it at a depreciated value. Be wary while making an inventory of products to be insured.
  • Take two or more insurance covers to become eligible to get discounts.
  • Like any other insurance plans, if insurers are convinced that you have installed all safety equipments at your home then you will become eligible to get discounted premium. If you have security guards posted 24×7 in the building and fire safety alarms installed at home, then you will get discounts in premium.