Owning your own abode is like a dream come true for anyone. However, getting a home loan becomes unavoidable to fulfill that dream. Now, applying for the loan and getting the lender’s approval is just the beginning. You need to have all the provisions in place to pay off the loans. Getting a term plan is one of those provisions for you to consider.
How can a term plan cover the risks of a home loan?
One of the best things about a term plan is that you can get larger life coverage at a low premium rate. In your absence, your family members will get the insurance money that they can use for home loan repayment. However, there are a few things you need to keep in mind to ensure this.
First off, the policy term should be equal to or more than the loan terms. Before you calculate term insurance premium, consider all the riders that you need to include. Riders like critical illness riders and accidental benefits are really helpful because they can give you additional benefits in case of an emergency. Though they will increase your premium slightly, it is a small price to pay considering the long-term needs of such riders.
Besides, you can use the lump sum amount from the same riders and use it to repay the loan if the need arises. So, when you think of taking a home loan to fulfill your family’s dream of owning a home, also consider buying a term plan to make them free from the liability of loan EMIs.
Benefits of buying a term plan when you have home loans
A term plan is like a safety net for your family in your absence. As mentioned before, it can do a lot more than that and can even help you pay off your home loans in some cases. With a term plan, you can ensure that your loved ones have the means to pay the outstanding loan amount. So, if you already have a home loan and are on your way to buy a term plan, then here are the benefits you should know about:
Lower premium rate:
The premium amount for a term plan is lower than all other insurance plans. So, getting a term plan and a home loan together should not be too much of a problem.
Higher life coverage:
Based on your credit score and risk portfolio, you can get a higher coverage from your term plan. Your total coverage must be a minimum of 10x the yearly income over your outstanding loan amount.
The flexibility factor:
Along with an affordable premium and maximum coverage, your term plan will let you make the necessary changes to the plans based on your needs. You can change the premium, the coverage, or add more riders if that suits you.
As mentioned before, factor the riders in when you calculate term insurance premium. While there is no denying that riders get you additional benefits in times of need, it is also true that your family can use that extra money to pay off the home loan.
So, if you have already got your home loan, then it’s time to apply for a Kotak Life e-Term Plan. Keep the points mentioned above in mind to apply for the right insurance amount and tenure.
Click here to know more about Kotak Life Term Insurance Plan: https://www.kotaklife.com/online-plans/online-term-insurance-plans