Owning a home is not an easy task. You need to choose the right one as well as arrange enough funds. You also need to apply for a home loan and wait for the approval. Though the process looks tedious, it’s like a dream come true! But, what happens in case of an eventuality? Will your family members be able to bear the financial hardships? Certainly not! This is when a term insurance plan comes as a saviour. Term insurance is a vital form of life insurance. It offers many benefits and you get the cover at a low cost as well. A term plan comes in handy when you have a home loan. This is because the sum assured works well to pay off the loan after your death and keeps your family away from any unwarranted financial burden.
Take a look at this article to know more.
How a term plan covers a home loan
Let us take a quick look at some of the ways in which a term plan can be beneficial for a person who has a home loan.
- No financial burden on family: The proceeds from a term insurance plan can easily be used to pay off the home loan after your death. You should therefore buy a plan that is large enough to cover the entire loan amount. Without such a term insurance cover in place, it will be very difficult for your family to pay the loan off in your absence. It will put them under a very severe financial burden and make life very difficult for them. You surely don’t want that, so buy a term plan and be rest assured.
- No chance of eviction: You bought the house so that your parents, your partner and your kids always have a roof above their heads. Won’t you be horrified at the thought of your family being evicted from the house and that too when you won’t be around to help them? To prevent such a thing from happening, cover your home loan with a term plan. If you die before repaying the loan, the sum assured from the term plan will take care of the repayment after your demise. There will be no lapses in the EMI and your family will never be forced to evict the house.
- Highly affordable: A big reason why you should buy a term plan to cover your home loan is that the term plans are quite inexpensive. This makes buying term insurance very affordable. You can easily afford the plan and continue to protect your family members from any unwarranted financial strain later on.
- Fixed benefits: The sum assured in a term insurance plan is fixed. So even if a claim is made when the home loan repayment balance is low, your nominees will get the full payout. They can use the required amount to clear the loan and the remaining amount in any way they wish to. This gives you and your family members a dual advantage. Finances are not easy to manage and if there is an extra supply, it is always useful.
- Critical illness rider: You can buy a term insurance plan with a critical illness rider. If you have a family history of cancer or any other life-threatening illness, you can benefit from buying this rider. Once diagnosed, you will get a separate lump sum amount which you can use in any way you wish to. You can use it to clear the home loan or you can use it as an income replacement that would take care of the home loan EMIs too. A critical illness rider along with the term plan can indeed help your cause significantly.
- Ease in changing lenders: In case you wish to change your home loan lender, you may do so easily if you have a term insurance back-up. Besides, post completion of your home loan, the term insurance plan will continue offering life cover to you and your family members by paying your premiums regularly. However, if you wish to opt out, you may do so.
In a nutshell
To put it in a nutshell, it is vital to buy a good term insurance cover if you have a home loan. As we saw from the points mentioned above, there are many advantages of doing this. Most importantly, the term plan protects your family members and allows them to live comfortably in their own home after your death. As a concerned person, this is all you want for them. So buy a term plan and cover your home loan, if you haven’t done so already.
