While a term insurance plan provides the sum assured to the nominees, a home loan protection plan (HLPP) helps in repaying a home loan in case the loan borrower dies or gets disable during the tenure of the plan. Thus, it’s essential to consider purchasing both the insurance plans in order to ensure the financial security of your family.
Let’s understand the importance of term insurance and home loan protection plan-
What is Term Insurance?
Term insurance provides financial protection to a beneficiary in the event of the death of the insured person. Hence, it can financially secure the future of the policyholder’s family.
If a person purchases term insurance, then he/she will have to pay a premium and receive coverage based on different factors, like age, health at the time, etc. Furthermore, it offers a set amount of coverage. The sum assured is either paid out as a lump sum or in periodic payments.
What is a Home Loan Protection Plan?
A home loan insurance plan is one of the most important financial instruments homeowners need. This is because it protects you from the risk of not being able to repay your mortgage should something unexpected happen. The home loan insurance plan is an insurance product that guarantees you against defaulting on your mortgage if a certain event happens.
Differences Between Term Insurance and HLPP
With term insurance, you pay the premium upfront when you apply for the insurance. The policy will be renewed when you pay the premium unless you cancel it before the end of the term.
Home loan insurance plans work the same way as term insurance plans. However, the main difference is the risk covered. These plans cover the risk of not being able to repay the loan due to a specific reason.
With a home loan insurance plan, you must first apply for a loan. After that, your mortgage insurance will be calculated. In case of a home loan insurance plan, you might be asked to prove your ability to repay the loan and provide supporting documents the lender requires.
Home loan insurance plans are designed to protect you from risk and make sure you stay on the right track when it comes to your finances. This is especially important if you have a large mortgage since defaulting on a loan can lead to financial problems.
But term insurance provides financial protection in case of the policyholder’s death during the tenure of the plan. If the insured person dies during the tenure, then his/her family gets the sum assured. This sum assured can be used to meet regular expenses, future goals, etc.
Home loan insurance plans can financially secure you against the risk of not paying the home loan if something unexpected happens. Term insurance is a type of insurance that covers you for a set amount for a specific period. Both insurance plans are crucial to safeguard your family’s future. So, invest in term insurance now.