Buying a home? Opt for term insurance plan

Sameer Bansal

A term plan is an affordable insurance product that provides excellent protection. If you’re buying a home, you should consider insuring it wisely. Purchasing a first house is a milestone and justifiably it deserves a celebration as it is a key acquisition. You would have saved for years, drawn on savings, taken help from family and friends to make the down payment for your very first place. You judiciously plan for EMIs too.

However, stop for a minute to think about the kind of insurance you are taking to protect yourself and your loved ones from financial burden (of EMIs) in case of your premature death. If you have taken a loan against the house, your death will pass on the liability to your family. Have you thought about securing them in case of unforeseen situations that may leave them bereft and without a home?

We live in high pressure times, and there is no saying what tomorrow will bring. A good insurance product will hold you in good stead in future. So if you’re mulling over insurance options for your home, you should look at a good term plan.

What is term insurance

A term plan is an insurance product that ensures a lump sum to the family in case of the unfortunate death of the policyholder. The product has a low premium for a high life cover. Globally, the term insurance is one of the fastest growing segments today. Term plans bought specifically to protect one against loan liabilities are also known as credit protection plans.

When you buy a home, the bank or financial institution lending you money in lieu of a loan will normally suggest that buy life insurance too. The term plan can be of an equivalent value as your housing loan and for the same tenure. In case of your death, your family will not lose the home for not being able to repay the outstanding loan amount. The insurer will repay the loan.

Selecting the plan

Zeroing in on a suitable term plan will be based on a number of factors such as how much cover you need, the preferred tenure and whether it is possible to increase the sum assured later (than the projected amount when taking the plan).

The author is Director Bancassurance, PNB MetLife. The views expressed in this article are his own