IDBI Federal Homesurance Protection

What does it do?

This home loan assurance plan pays outstanding loan amount to the nominee in case of unfortunate demise of the insured. This is a decreasing sum assured plan where the sum assured decreases as the loan is repaid.
The policy can also cover joint lives. The death benefit in this case becomes payable upon first death of any one of the co-borrowers. The policyholder has an option to add premiums to the loan amount and repay it as a part of EMI. It allows to take a policy term of maximum of 25 years. If borrower wishes to get insured for a period less than the loan tenure, he can opt for a fixed period coverage of 10 years. This feature is available for a loan term of 15 to 25 years. This policy covers increase in EMIs or loan amount due to rising interest rates. However, if the interest rate falls resulting in decrease in outstanding loan amount, the insurance company will pay higher of the outstanding loan as per policy schedule, as the death benefit. If death benefit is more than the  outstanding home loan amount, the excess amount will be paid to nominees.
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.
If the borrower prepays the home loan, the policyholder can either surrender the policy and receive surrender value applicable on that date or continue to enjoy the homesurance cover. In case of any unfortunate event, the amount as per policy schedule will be paid to the nominee. However, there is no guaranteed surrender value.The cover continues even if loan is transferred to another home loan company.