Safeguard your home with property or term insurance policy

financialexpress.com:

Owning a home is a dream for crores of middle-class Indians. However, properties are expensive these days — even in a tier-2, -3 location — and people depend on home loans to see their dreams come true.

Let’s say you have taken a loan and are in the process of repayment. Medical emergencies are never predictable, and so is one’s demise. In such an event, can your family cope with your loss and also bear the burden of the home loan? Could that financial liability be lifted off their shoulders?

It is in these circumstances that a home insurance policy or term insurance comes in handy.

Home loan insurance, or a term policy, is an option for your family to repay the loan in case of your demise during the loan repayment period. It helps your family by not letting them fall into a debt trap, by repaying the remaining loan amount to the lender.

Home insurance is mainly of two types — Term Insurance and Home Loan Protection Plan (HLPP). While both products are aimed at covering your home loan, they are different in several ways.

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The basic difference between a term insurance policy and an HLPP is that in term insurance, the sum insured remains unchanged, while in HLPP, the sum insured will progressively come down as one repays the home loan amount.

It means that in an HLPP, the insurance company will pay only the outstanding loan amount to the deceased borrower’s family, while in term insurance, the family of the insurer will get the entire sum insured.

The policyholder needs to pay regular monthly instalments in a term insurance policy, while an HLPP requires a one-time payment. A term plan is cheaper than an HLPP. For example, if the premium of a Rs 1 crore term plan