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Homesurance Protection Plan is a mortgage reducing term assurance plan, which provides insurance cover equal to the outstanding balance of your home loan. In the unfortunate event of death of the home loan borrower, the insurance cover enables repayment of the home loan liability so that it does not become a burden to the family.
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A home loan is usually a large liability and if the breadwinner who would repay the loan were not to be there, it could become a serious burden to the family. The Homesurance Protection Plan protects against this liability. The specifics of the plan are as follows:
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Your outstanding home loan amount normally reduces over time as you repay by way of monthly installments. Accordingly, the cover amount under the Homesurance Protection Plan also reduces with time to reflect the outstanding loan amount. At the time you take the plan, you will receive a Policy Schedule based on the amount and terms of your loan, which will show you the reducing cover amount over time.
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In the event of death of the insured, we will pay either the cover amount as per the Homesurance Protection Plan Policy Schedule as on the date of death, or the actual outstanding balance in the insured loan account as on the date of death, whichever is higher. Death due to any cause including illness or accident is covered under the plan. Death, whether in India or abroad is also covered under the plan.
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Many times, your property might be under construction and though the loan is sanctioned it is disbursed in stages depending upon the construction schedule. During the construction period, Homesurance covers the full sanctioned amount of your home loan and not just the outstanding loan which will be lower because of part disbursements.
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Full cover during the construction period ensures that the family is assured of the home even if the loan is not fully disbursed. If death occurs during the construction period, we pay the full sanctioned loan amount. Part of the payment can be used to pay off the partly disbursed loan amount and the balance can be used to pay the remaining amount due to the builder to complete the construction.
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If your loan term includes a construction period, Homesurance will automatically provide full cover during the construction period without any additional cost. However, the construction period cover is limited to a maximum of 3 years.
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Homesurance covers fixed rate as well as floating rate home loans. In floating rate home loans, the bank or housing finance company may increase or decrease the interest rate based on the movement of market interest rates. Even in fixed rate home loans, the interest rate is usually fixed for a specified period after whichit may be revised.
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If you do not wish to have insurance cover for the entire loan term, you can opt for a limited period cover of 10 years. For the first 10 years from commencement of the Plan, you will have the Homesurance cover after which it will cease. Fixed period coverage is available only if your home loan term is 15 years or more.
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Homesurance can cover your entire home loan for a small cost. The premium you pay depends upon your age, gender, loan amount and loan term. Illustrative premiums for a healthy male aged 30 are given below (assuming loan interest rate of 12%). Insuance of the policy is subject to underwriting including medical assessment as required by us. You can choose a policy term greater than your loan term if you wish to cover the risk of your loan term getting extended due to hike in interest rates.
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The policy may acquire Surrender Value if all the due premiums have been paid. Surrender Value will reduce over time. The Surrender Value is not guaranteed.
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