Why should you opt for it?If you go for such a cover, you do not have to worry about the debt burden on your dependents. This kind of insurance is very important if an individual has borrowed for an under construction property, which has a certain moratorium attached to it. If the borrower dies, the bank has the right to attach the property to clear the remaining loan amount, if the dependents are not able to repay it.
In such a situation, this policy plays a vital role since it pays the entire sum assured to the bank as on that date of the insured's death and the outstanding in the books of the bank is cleared. After the outstanding amount is cleared, the balance left can be paid to the nominee/dependent of the customer.
Difference between mortgage insurance ad term insurance.
The sum assured remains constant in a term plan whereas it decreases as the amount outstanding goes down in case of mortgage insurance.
Home loan insurance is cheaper than a term cover in absolute terms. The difference between the cost of the home loan cover from ICICI Prudential life and the company's Pure Protect Elite term plan for a sum assured of Rs. 40 lakh with tenure of 15 years is more than Rs. 40,000.
In addition to this, the non-medical limits are quite high in home loan plans as compared to term plans.