What does it do?
The sum assured under this policy decreases as the outstanding home loan is repaid.
This policy offers loan protection along with terminal illness benefit, i.e. if the insured person is diagnosed with a terminal illness and not expected to survive more than 6 months, the benefit will be paid equivalent to sum assured available after six months, subject to a maximum of Rs 25 lakh.
The policy will expire at the end of first remaining policy year where the sum assured as per policy schedule is greater than or equal to the terminal illness benefit.
Single premium policyholders are allowed to surrender the policy.
This policy also covers increase in home loan amount due to increase in interest rates. On the contrary if the outstanding loan reduces with falling interest rates, the insurance company will pay the higher of outstanding home loan as per policy schedule to the nominee.
If home loan term includes construction period as well, the policy in case of any eventuality during that period, pays full sanctioned loan amount which can be used to repay the partly disbursed home loan and the builder. However, construction period coverage is limited to 3 years and loan term has to be more than 15 years. Policy term will be loan term plus construction term.
It also offers additional riders to widen the coverage. Waiver of premium rider makes sense as all future premiums will be borne by the insurance company in case of total and permanent disability of the life insured. Major diseases benefit becomes must if you have a family history of any of the listed illnesses.
Pros
This decreasing home loan protection cover saves policyholders from paying for the protection that is actually not required.
The plan provides riders for additional protection. Major diseases rider is a comprehensive one covering 17 major diseases.
Single premium policyholders have an option to surrender their policies.
It covers an increase in home loan amount on account of rising interest rates.
Premiusm qualify for taxation benefits.
