An OTP will be sent to this number for verification
You may have a pre-approved offer
Enter required home loan amount
In summary
A home loan is typically the largest financial commitment most families make. A home loan protection plan (HLPP) ensures that this commitment does not become a liability for your family if you are no longer able to repay it.
This page covers:
- What a home loan protection plan (HLPP) is and its purpose
- Coverage duration: how it works alongside your loan tenure
- Why a HLPP is important for borrowers and lenders
- Characteristics, including premium options, joint cover, riders, and add-ons
- Basic vs. comprehensive coverage
- Types of HLPP plans: decreasing cover vs. level cover
- What is and is not covered
- Key differences between HLPP and term insurance
- How to choose the right HLPP
Show more
Show less
What is a home loan protection plan (HLPP)?
A home loan protection plan (HLPP) is a type of insurance specifically designed to pay off the remaining outstanding balance of your home loan in the event of your death, permanent disability, or (in some plans) sudden involuntary job loss. It protects two parties simultaneously: your family retains ownership of the home without the burden of EMIs, and the lender recovers the outstanding loan amount from the insurer instead of pursuing the property.
A HLPP is not mandatory, but it is strongly recommended for borrowers who are the primary earning member of their household, have long loan tenures, or have dependents who would not be able to service the loan independently.
Show more
Show less
What is the purpose and coverage duration of a HLPP?
Purpose: To ensure your family does not face financial distress or risk losing the home if you pass away, become permanently disabled, or lose your job unexpectedly during the loan tenure.
Coverage duration: The HLPP policy period matches your home loan tenure exactly. If your home loan runs for 20 years, the insurance covers you for all 20 years. Once the loan is fully repaid, the insurance also ends because the obligation it covers no longer exists.
Show more
Show less
Why is a home loan protection plan important?
| Who it protects | How it helps |
|---|---|
| Your family | Pays off the entire remaining loan balance; family retains the home without the EMI burden |
| The lender | Ensures the outstanding loan is recovered even if the borrower dies or becomes disabled |
| You (the borrower) | Peace of mind knowing your family is protected from financial stress if something happens |
Show more
Show less
Characteristics of HLPP premium payment options
| Option | How it works | Best for |
|---|---|---|
| One-time (single premium) | Full premium is paid upfront at policy start | Borrowers with sufficient upfront funds |
| EMI integration | Premium added to the loan amount and repaid with EMIs | Borrowers who prefer spreading the cost |
Show more
Show less
Home loan for professionals
Joint home loan coverage
If your home loan has a co-borrower (spouse, parent, or child), you can opt for a joint HLPP policy. If one borrower dies, the insurer covers their share of the outstanding loan; the surviving borrower is only responsible for their own portion. This prevents the full burden falling on a single person.
Show more
Show less
Riders and add-ons
Many insurers offer optional add-ons for broader protection:
- Critical illness cover: Waives EMIs or pays out a benefit if you are diagnosed with a specified critical illness
- Permanent disability cover: Covers the outstanding loan if an accident results in permanent disability
- Job loss cover (EMI protection): Covers 3 to 12 months of EMIs if you face involuntary job loss
- Accidental death benefit: Additional payout over and above the loan outstanding in case of accidental death
Show more
Show less
What is covered and what is not covered under HLPP?
| Covered | Typically not covered |
|---|---|
| Death of borrower during policy term | Pre-existing medical conditions (unless disclosed and accepted at policy start) |
| Permanent total disability | Voluntary resignation or retirement (for job loss cover) |
| Critical illness (if rider added) | Self-inflicted injury |
| Involuntary job loss (if rider added) | Death due to war or acts of terrorism (in some policies) |
Show more
Show less
Types of HLPP coverage: decreasing vs. level cover
| Type | How the sum insured works | Best for |
|---|---|---|
| Decreasing cover | Cover reduces each year in line with the reducing outstanding loan balance | Most common; it mirrors the actual exposure |
| Level cover | Cover remains fixed at the original loan amount throughout the tenure | Provides an additional payout if death occurs early (before significant principal repayment) |
For pure loan protection purposes, decreasing cover is generally sufficient and less expensive. Level cover provides extra protection but costs more.
HLPP vs. term insurance: key differences
| Parameter | Home loan protection plan | Term life insurance |
|---|---|---|
| Purpose | Specifically covers the outstanding home loan | General life cover: family received lumpsum |
| Cover amount | Decreases with the loan outstanding | Remains level throughout the policy |
| Beneficiary | Directly assigned to lender | Nominee chosen by the policyholder |
| Flexibility | Low: tied to the loan | High: family decides how to use the payout |
| Cost | Typically cheaper for the specific loan protection | May cost more for equivalent cover |
Many financial advisers recommend having both, a term insurance for general family income protection, and an HLPP or lender assignment of term cover specifically for the home loan.
How to choose the right home loan protection plan
- Match the policy tenure to your actual loan tenure
- Opt for a plan where the sum insured reduces in line with your loan outstanding
- Consider riders based on your specific risk: critical illness if family history is relevant; job loss cover if your employment is in a volatile industry
- Compare the total cost of HLPP (whether embedded in EMI or paid separately) against a standalone term plan covering the loan amount
- Read the claims process carefully: a plan that is easy to claim is worth more than one with a low premium but complex exclusions
A home loan protection plan is a small investment that provides significant peace of mind for the entire tenure of your loan. Pair it with a well-structured home loan to ensure your family's financial security. Bajaj Finance offers home loans from 7.25% p.a.** with amounts up to Rs. 15 Crore* and tenures up to 32 years. Check your eligibility today.
Frequently Asked Questions
Overview
Documents and Process
Legal and Closure
Coverage and Claims
What is a home loan protection plan and how does it work?
A home loan protection plan (HLPP) is a dedicated insurance policy designed to secure your outstanding mortgage debt. If the primary borrower passes away, faces permanent disability, or suffers a critical illness during the loan tenure, the insurance company steps in. The insurer directly settles the remaining balance with the lending bank, ensuring the family retains homeownership without a heavy financial burden.
What is the difference between a term insurance policy and a home loan protection plan?
A term insurance policy offers a constant sum assured that is paid directly to the nominees upon the policyholder's death, giving them the flexibility to spend it as needed. A home loan protection plan features a diminishing balance cover that decreases alongside your outstanding mortgage. The payout goes directly to the lender solely to wipe out the specific home loan liability.
How does a home loan protection plan differ from standard home insurance?
A home loan protection plan covers the financial liability of the mortgage debt to protect borrowers and lenders from default. In contrast, standard home insurance covers the physical structure and contents of the house against damages from natural disasters, fires, or theft. HLPP protects your family from losing the home due to debt, while home insurance protects the property from physical destruction.
What factors influence the premium rates of a home loan protection plan?
The premium for a home loan protection plan depends on several key risk factors. These include the total mortgage loan amount, the chosen repayment tenure, and the borrower’s age and medical history. Additionally, adding riders like critical illness, or opting for joint coverage for co-borrowers, will increase the overall premium cost of the policy.
What is the price of home loan insurance in India?
The cost depends on several factors, including the size of your home loan, the loan term, and your chosen insurance company. To find a suitable plan, compare quotes and use a home loan insurance calculator to get estimates tailored to your loan details.
What types of riders can be added to a home loan protection plan?
Borrowers can enhance a home loan protection plan by adding specific optional riders for comprehensive coverage. Common additions include critical illness riders, which pay out if you are diagnosed with conditions like cancer or stroke. Other valuable options include accidental death benefit riders, permanent total disability riders, and job loss riders that cover your monthly EMIs for a specific temporary period.
Is a home loan protection plan mandatory when taking a home loan?
No, regulatory bodies like the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (IRDAI) state that buying a home loan protection plan is not legally mandatory. However, some lenders may suggest or encourage it as a condition of loan approval. You are not obligated to buy insurance from the lender; you can opt for a term insurance plan and assign the home loan amount to the lender as an alternative. Compare the costs of both options before deciding.
What happens to the HLPP if you repay your home loan early?
If you foreclose your home loan before the original tenure ends, the HLPP policy typically terminates. Depending on the policy terms, you may be entitled to a refund of a portion of the premium paid (particularly for single-premium plans). Check the surrender and refund terms in your specific policy document before signing.
Can you transfer your HLPP to a new lender if you do a balance transfer?
Most HLPP policies are linked to a specific lender. If you do a balance transfer to a new lender, your existing HLPP typically cannot be transferred; you would need to purchase a new policy. This is an important cost to factor in when evaluating balance transfer savings. In some cases, a standalone term insurance plan assigned to the new lender is more flexible than a lender-tied HLPP.
What are the tax benefits associated with a home loan protection plan premium?
The premium paid toward a home loan protection plan qualifies for tax benefits under the Income Tax Act, 1961. If the premium is paid directly as a lump sum, it is eligible for deductions under Section 80C. If the premium is bundled into the loan amount and paid via monthly EMIs, you can claim the interest component under Section 24(b).
How is the HLPP claim settled?
In the event of the borrower's death or qualifying disability, the nominee or surviving borrower files a claim with the insurance company. The insurer verifies the claim and, upon approval, pays the outstanding loan amount directly to the lender. The original property documents are then released to the family or surviving borrower by the lender after the loan balance is cleared.
Does a home loan protection plan cover co-borrowers or joint loan applicants?
Yes, a home loan protection plan can easily cover joint loan applicants under a single policy. The coverage can be structured in two ways: it can cover both individuals up to 100% of the loan amount, or it can divide the coverage proportionally based on each co-borrower's respective share of the loan EMI repayment, protecting both parties adequately.
Does home loan insurance cover death and critical illness?
Yes, a home loan insurance, or home loan protection plan, generally includes coverage for death, critical illness, total disability, and (sometimes) temporary loss of income, depending on the policy and chosen add-ons.
Home Loan in Different Cities
Home Loan in Mumbai
Home Loan in Ahmedabad
Home Loan in Bangalore
Home Loan in Chennai
Home Loan in Delhi
Home Loan in Hyderabad
Home Loan in Cochin
Home Loan in Noida
Home Loan in Pune
Home Loan for different budget
Check your pre-approved offer now
Our Calculators
What do our customers say about us
customers
Play Store rating
reviews
Amit Shiva
Reviewed on
Smooth and transparent home loan process. The interest rates were competitive, and documentation was minimal. The team guided me clearly at every step, making my first home purchase stress-free. Highly recommended for quick approvals.
Sandeep Kulkarni
Reviewed on
The loan disbursal was fast, and the customer support team was extremely patient with all my queries. Flexible EMIs helped me manage my monthly expenses easily. A great experience for salaried homebuyers.
Ritika Agarwal
Reviewed on
I had a great experience while transferring my existing home loan. The process was quick, and I saved significantly with the lower interest rate. Customer service was helpful throughout. Highly recommended for balance transfers.
Manoj Verghese
Reviewed on
Clear guidance, quick approval, and flexible repayment options made buying my new house easier than expected. The team handled everything professionally. Very satisfied and would definitely recommend their home loans
Find your nearest branch
More Articles
Watch our videos
Documents required to get a Bajaj Finance Home Loan
Tips to increase your Home Loan eligibility
Things you need to know about pre-approved home loan
Things you need to know before applying for a Home Loan
How does Repo Rate affect your Home Loan
Download App
Now request money from your friends and family and make instant payments.
- Choose from personal, business, gold loans and more
- Pay utility bills, use UPI, get FASTag and more
- Buy over 1 million products on No Cost EMI
- Buy stocks, mutual funds and invest in FD
Disclaimer
1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.
2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.