First time I am listening about this concept. Please let me know how can i proceed on it? whether separate insurance system is there or regular insureres can do this.
Re: Insurance of home loans
by milind malwade on Nov 25, 2010 04:56 PM
instead of this LIC is having one policy where you can cover 25 lacs for just premium about Rs5000-8000 per year depnding upon age. so if loan is about 25 lacs and anything happen in between LIC pay rs. 25 lacs
Re: Insurance of home loans
by prasanna krishnan on Nov 25, 2010 05:02 PM
canara banks are the most pathetic. bugger s take 2 months to process a house loan, after i have a turnover of 1 crore from march to date. plz people avoid canara bank for housing loans. they will make you suffer with their pathetic attitude.
thanks for a nice informative post, it would be nice if you suggest some companies whic offer Home Loan Insurance cover, i heard that it is much economical to have insurance of home loan from outside insurace agency as compared to bank itself which financed your assest.
Re: Why not simply buy a term life insurance??
by Vikas Voshi on Nov 25, 2010 04:26 PM
I agree.. Life Term Insurance seems a better deal than Home Loan Insurance.
Re: sell the asset
by neeraj kulkarni on Nov 25, 2010 01:46 PM
and where should the family live after that. foolish comments without reading the article
Why should the onus of insuring such a loan be on the borrower? It is expected that the lender do the due diligence and evaluate the creditworthiness of the family members as well while selling the home loan. Let the banker evaluate the risk of default in this kind of circumstance and insure its lending against such risk.
Re: Let the lender insure the loan
by Argumentative Indian on Nov 25, 2010 12:20 PM
This is 'Survival of the Fittest'.
Suppose, Mr. S takes a Rs. 20 lac loan to buy a Rs. 24 lac home in Yr1. At the begining of Yr3 he dies in a road accident, leaving behind 1 wife (home maker) 2 children, home loan of say 18.5 lacs insurance of value say Rs 20 lacs & another say Rs. 8 lacs in movable assets like PF Gratuity other investments etc.
The Bank did due diligence, Mr. S, when alive had sufficient paying capacity, the only reason he cannot pay anymore, is because he has ceased to exist. So banker asks his wife to pay up, or forfeit the mortgaged asset for the loan, in this case the house.
The new widow, now has 2 options that i can think of:
1) Forthwith sell the house and repay the loan, hopefully thanks to building mafia driven unrealistic appreciation in prices she would make around Rs. 5 to 6 lacs profit, but not have a house now.
2) Pay off the loan using most of her LIC dues and then figure out a way to survive and provide for at least reasonable future needs of 2 kids.
Maybe the bank can be challenged in court, though unlikely, in any situation the case would drag for maybe a decade & the new widow is unlikely to be able to match a bank's legal resources.
How much better to insure the loan and support your loved ones from beyond the crematorium, cemetary, grave, tower of silence, etc. etc.
