I’m planning to take a home loan soon and someone suggested I should also get home loan insurance. Is that even a thing? And if yes, is it compulsory or just optional?
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Home loan insurance is a term insurance policy that covers your outstanding home loan. If something happens to you (like death or critical illness), the insurer pays off the remaining loan amount so your family doesn’t lose the house or struggle with EMI.
Why you should have home loan term insurance-
- If something happens to you, the insurance ensures your family doesn’t have to carry the loan burden.
- While it’s not legally required, some banks or NBFCs may strongly recommend it during the loan process.
- You can choose to cover the full loan amount (like ₹50L) or go for a decreasing cover that drops as your loan reduces over time.
Yes, home loan insurance exists in India but it’s not mandatory. It’s a life cover that pays off your loan if something happens to you.
Banks may push it but you’re not required to take it, especially not from them. If you already have good term insurance, you can skip it. If not, consider boosting your cover separately.
A better option is to buy a solid term life insurance policy with riders like accidental death benefit, total permanent disability, and critical illness. These offer broader protection and are often smoother and cheaper than bank-linked plans. Avoid single premium plans added to the loan as they increase your EMI. Annual premium plans or a standalone term policy with the right riders usually work better. It’s completely optional, so choose it only if it fits your needs.