Mortgage Insurance: Safe, Secure homes

The only thing certain about life is that it is uncertain. Imagine somebody who has taken a home loan and is very particular about paying his installment on time. What if he meets with an untimely death? Not only does his family have to deal with the emotional loss, but also with the people from the collection agencies who will descend upon the family to collect the skipped EMIs.

A cover equal to the value of the loan is essential to protect the future of the family under such circumstances. Mortgage insurance caters to such a need.

The concept of mortgage insurance is relatively new in India. Only, Metlife Insurance, HDFC Standard Life Insurance, Allianz Bajaj, Reliance Life Insurance and SBI Life Insurance offer this cover. TATA AIG provides it only through its group policy.

To protect a loan repayment schedule, they offer a cover that decreases as the value of the loan outstanding falls. The premium however, remains the same for the entire duration of the cover.

You can pay either a single premium or annual regular ones. If you take the regular premium plan, the premium paying term is only two-thirds of the policy term.

In a regular plan, you can terminate the cover if you pay off the loan sooner than the loan term. A single premium would actually be a loss if the term of your cover comes down due to prepayment of the loan. Upon the borrowers death, the insurance company pays the outstanding amount of the loan to the bank.

To top it all, you can avail the same Section 80 C tax break on this one as you get on other life policies.