Secure Your Home Loan with Term Insurance Plan

Know how term insurance plans can secure your financial needs such as home loan when needed.
Check Life Insurance Policies
3 min
29-May-2025
Term insurance, simply put, provides financial security to the policyholder's family in times of uncertainty. It is a practical solution for managing financial obligations such as home loans. While a home loan provides access to the property, it also comes with the responsibility of repaying the loan, even in unforeseen circumstances like the borrower’s untimely demise. This is where term insurance for home loan protection becomes a critical safety net. It ensures that loved ones are not burdened with the financial stress of loan repayment if the policyholder is no longer around. By choosing the right term insurance plan, families can secure their financial future and preserve their dream home.

How does term insurance help you secure your home loan?

Term insurance is designed to provide a financial safety net to your family in the event of your demise. When used for home loan protection, it ensures that the outstanding loan amount is covered, preventing your loved ones from facing the burden of repayment or risking the loss of the property.

Key points:

Loan repayment assurance:

The insurance payout can be used to settle the outstanding home loan, ensuring your family retains ownership of the home.

Reduced financial stress:

It protects your family from the emotional and financial strain of managing loan repayments during a difficult time.

Affordable premium:

Term insurance is one of the most cost-effective ways to safeguard your home loan, providing substantial coverage at a low cost.

Customisable coverage:

You can align the sum assured with your loan amount and repayment term for precise protection.

Key features and benefits of term insurance

Term insurance plans offer a range of features that make them an effective tool for financial security, especially when linked to home loan protection.

High sum assured:

Provides a large cover to ensure the home loan is fully paid off in case of the policyholder’s demise.

Flexibility in tenure:

Term insurance plans allow you to choose a policy term matching your home loan tenure.

Cost-effective premiums:

Offers significant coverage at affordable rates, making it accessible for most borrowers.

Tax benefits:

Premiums paid are eligible for tax deductions under Section 80C, and the payout is tax-free under Section 10(10D).

Additional riders:

Options like critical illness and accidental death riders enhance coverage for unforeseen circumstances.

Peace of mind:

Guarantees financial stability for your family while protecting your property investment.

How do you choose the right term insurance plan for home loan protection?

Selecting the right term insurance plan is crucial for comprehensive home loan protection. The ideal plan should balance affordability, coverage, and additional benefits.

Coverage amount:

Ensure the sum assured matches the outstanding loan amount to avoid underinsurance.

Policy tenure:

Align the policy term with your home loan repayment period for complete protection.

Claim settlement ratio:

Opt for an insurer with a high claim settlement ratio to ensure reliability.

Additional riders:

Evaluate options like critical illness or disability riders for enhanced coverage.

Premium affordability:

Compare premiums across insurers to find a plan that fits your budget without compromising coverage.

Flexibility:

Look for plans that allow policy adjustments in case of changes in your loan structure.

How much does a term insurance cost for securing home loan?

The cost of term insurance depends on several factors, including the sum assured, policy term, and your personal profile. However, term insurance is known for its affordability, especially when compared to other insurance products.

Age:

Younger policyholders enjoy lower premiums due to reduced risk.

Loan amount:

Higher loan amounts result in higher premiums due to increased coverage.

Policy term:

Longer tenures may have slightly higher premiums but provide extended protection.

Health status:

Applicants with a healthy lifestyle and no pre-existing conditions get lower premiums.

Smoking habits:

Smokers generally pay higher premiums due to increased health risks.

Additional riders:

Adding riders like critical illness or accidental death increases the overall cost.

Conclusion

Term insurance for home loan protection is a practical and cost-effective way to secure your family’s financial future. It not only ensures that your loved ones are not burdened with loan repayment but also guarantees the ownership of your dream home remains intact. By selecting the right plan tailored to your needs, you can provide peace of mind and financial stability to your family, even in your absence.

Frequently asked questions

What is the significance of term insurance for home loan protection?
Term insurance ensures that your home loan is repaid in case of your untimely demise, protecting your family from financial stress and securing the ownership of your property.

What are the key features of term insurance plans for home loans?
Key features include high coverage, affordable premiums, flexible policy terms, tax benefits, and options to add riders like critical illness or disability coverage.

How can you compare costs of different term insurance plans for home loans?
To compare costs, evaluate the sum assured, policy tenure, premium rates, claim settlement ratio of insurers, and additional benefits like riders offered in the plans.

How does term insurance provide peace of mind and financial security for borrowers?
Term insurance ensures your family is financially protected, enabling them to repay the home loan without stress. It safeguards the ownership of your property and offers tax benefits.

What factors should you consider while selecting term insurance for home loans?
Consider the coverage amount, policy tenure, premium affordability, claim settlement ratio, and availability of additional riders when choosing a term insurance plan for home loans.

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Disclaimer

*T&C Apply - Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Life Insurance Corporation of India (LIC), Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Company Limited, HDFC ERGO General Insurance Company, TATA AIG General Insurance Company Limited, ICICI Lombard General Insurance Company Limited, New India Assurance Limited, Chola MS General Insurance Company Limited, Zurich Kotak General Insurance Co. Limited , Star Health & Allied Insurance Co. Limited, Care Health Insurance Company Limited, Niva Bupa Health Insurance Company Limited , Aditya Birla Health Insurance Company Limited and Manipal Cigna Health Insurance Company Limitedunder the IRDAI composite CA registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer's website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. Tax benefits applicable if any, will be as per the prevailing tax laws. Tax laws are subject to change. BFL does NOT provide Tax/Investment advisory services. Please consult your advisors before proceeding to purchase an insurance product. Visitors are hereby informed that their information submitted on the website may also be shared with insurers. BFL is also a distributor of other third-party products from Assistance Services providers such as CPP Assistance Services Pvt. Ltd., Bajaj Finserv Health Ltd. etc. All product information such as premium, benefits, exclusions, sum insured, value added services, etc. are authentic and solely based on the information received from the respective insurance company or the respective Assistance service provider company.

Note – While we have made all efforts and taken utmost care in gathering precise information about the products, features, benefits, etc. However, BFL cannot be held liable for any direct or indirect damage/loss. We request our customers to conduct their research about these products and refer to the respective product’s sales brochures before concluding their sale.

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