Difference between home loan home loan insurance:From step-by-step process to benefits, get all details here

Everyone has a dream of owning a beautiful home. Many people take home loans to fulfill this dream. Once the loan is approved, it feels like the biggest hurdle has been crossed. But the real responsibility starts right here. People take home loans but forget to secure them. Some people even consider ‘home loan’ and ‘home loan insurance’ to be the same thing, whereas the purpose of both is completely different. If you are planning to take a home loan or have already taken one, then this article is useful for you. Today, we will learn about: Question- What is the difference between home loan and home loan insurance? Answer- A home loan is the fund that a bank lends for buying or building a house, which has to be repaid with interest within a fixed period (tenure). Home loan insurance is a ‘safety shield’. It provides financial security in situations like death of the loan taker, serious illness or disability in an accident. Understand it through the graphic- Question- What are the benefits of taking home loan insurance? Answer- Home loan insurance is a wise decision for the long term. See its benefits in the graphic- Question- How to get home loan insurance? Answer- Its process is simple. Understand this through the graphic- Question- How many types of home loan insurance are there? Which insurance is better? Answer- There are two types of home loan insurance. Reducing Cover In this, as the loan is repaid, the finance company’s liability (responsibility) decreases. Along with that, the insurance cover also decreases. This is cheaper in terms of premium. ‘Level Cover’ In this, the insurance amount remains stable throughout the entire period. For example, if there is a loan of 50 lakhs, then the cover of 50 lakhs will remain till the end. From a financial perspective, ‘Level Cover’ is better, because even if something unfortunate happens near the end of the loan, the family receives a large amount. Question- What risks can there be if home loan insurance is not taken? Answer- Taking a home loan without insurance is like leaving a big liability for the family. Let’s understand this through a graphic- Question- How does home loan insurance work and when does it get activated? Answer- This policy gets activated with the first payment of premium itself. Question- Is it mandatory to take insurance from the bank itself? What do RBI rules say? Answer- According to the Reserve Bank of India (RBI), it is prohibited for any bank to make selling insurance ‘mandatory’ along with a home loan. Question- If something unfortunate happens to the borrower, does the insurance company pay off the entire loan? Answer- This depends on the type of your policy. Question- Does the old policy still work if the loan is refinanced or transferred? Answer- If the loan is transferred from one bank to another bank, the old home loan insurance policy does not terminate. However, its coverage is set according to the outstanding balance of the previous bank. Question- What should one choose between home loan insurance and term insurance? Answer- This is a very important question.