is home loan insurance worth it or not?

Home loan insurance, often bundled with housing loans, is marketed as a safeguard against financial burdens in case of the borrower’s untimely demise. However, it’s not mandatory, and lenders cannot force you to buy it. The RBI has clarified that bundling insurance with home loans is illegal unless voluntary.

Home loan protection plans (HLPPs) cover the outstanding loan amount, ensuring families don’t struggle with EMIs or risk losing the property. Some plans require a single premium, while others allow annual payments. Coverage reduces as the loan balance declines.

Experts often recommend term insurance instead of HLPPs. Why?

– Broader coverage: Pays a lump sum to your family, not just the loan balance.

– Cost-effective: Term insurance is cheaper and offers better protection.

– Portability: Stays with you even if you refinance or switch lenders.

– Customization: Allows add-ons like critical illness or accidental death benefits.

HLPPs may still suit those ineligible for term insurance due to medical conditions or age. Some plans offer job loss or disability cover, but premiums rise significantly.

Before saying yes, compare options carefully—your financial security deserves the best choice.