Before getting into know whether it is mandatory or not, let’s briefly understand
What is home loan insurance?
A Home loan Insurance plan gives the bank a guarantee on the amount lent to the customer and a guarantee to the borrower / family incase of instability or demise of the borrower. Once the insurance company settles the lender, the borrower’s family / legal heirs get complete ownership of the property without any debt attached to it. The outstanding loan amount i.e. principle and interest (if any outstanding) will be paid by the insurance company to the bank directly.
Is it compulsory to opt for Home loan insurance?
Buying an home loan insurance while opting for a home loan in India is not compulsory. Nowadays certain banks have made it mandatory to protect their risks. However, you need to check with your financial institution or banks, you can inform them your willingness to take or not take the insurance scheme.
Is home loan insurance tax deductible?
Yes, you can avail tax deduction under section 80C of the income tax act on the premium paid towards the home loan insurance, but this deduction is not applicable if the premium is a part of the home loan Emi.
Can I Cancel my Home loan Insurance once taken?
Yes, you can cancel the insurance on your home loan at any time and you can also change the insurance companies at your will.
How do you avail Home Loan Insurance?
Home loan insurance can be availed while taking the loan from the same bank or a different insurance company or at times it is loaded as a bundle along with the home loan. Hence, you must do your due diligence and pick the right insurance plan as per your needs.