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Should I take the life insurance cover sold with home loan?
Mint 1 hr ago·14 Sept 2026, 9:51 am
When you take a home loan, lenders often offer an insurance policy that covers the outstanding loan amount. This policy, known as a home loan cover, is designed to pay off the debt if the borrower passes away, ensuring the family does not lose the house. However, this coverage is not always the best choice for every investor.
The main issue is that this cover typically has a 'flat' rate, meaning the sum assured decreases as the loan is repaid. In contrast, a standard term insurance plan usually has a 'reducing' rate, which aligns better with the actual loan balance over time. Investors should compare the premiums and coverage limits of both options to determine which provides better financial security for their loved ones.
Before buying, carefully read the policy terms to understand the exclusions and claim process. It is also wise to assess your family's overall financial needs, as a separate term plan might offer more comprehensive protection. Always choose a policy that offers genuine value and peace of mind.
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