Protect your loved ones from the burden of debt
Real estate prices being the way they are, buying a home is not easy. You need some kind of financing to make the purchase.
Financing a dream home
In 2015, Ritu Khanna took a home loan of Rs 29 lakh. She used the money to buy an apartment in a swank new housing complex. The 39-year-old IT professional lives with her ageing mother and seven-year-old son. Ritu’s husband, Ramesh, passed away in a tragic accident some years ago. Since then, she has been the sole earning member of her family.
A few months before Ramesh died, he had taken a personal loan worth Rs 3 lakh. He used this to partly fund his sister’s higher education. He had been paying the equated monthly instalments (EMIs) regularly. But the accident put a stop to that.
Then the repayment reminders began to come in. That is when Ritu realised that she would have to take over Ramesh’s loan. The balance was about Rs 2.5 lakh at the time. She was drawing a good salary at the time, so paying off the loan was not too difficult.
But a home loan of Rs 29 lakh is a whole other ball game. If something happens to Ritu, the burden of debt will fall on her dependent mother and child. She does not want them to face any hassle from the lender or from debt collectors. So, she decides to buy loan insurance.
Safeguard against death and illness
You may know how life insurance works. In the event of your death, the insurer pays a lump sum amount to your family. In doing so, it provides necessary financial support to your loved ones at their time of need.
Loan insurance has a similar function. But its target is more specific. Here, the insurer agrees to take over your liabilities in the event of your death. It may even come into play if you become temporarily or permanently incapacitated and unable to work.
This type of insurance lightens the financial load on your family. At the same time, it gives the lender an assurance. It indicates that loan repayment will happen even if the borrower dies or becomes disabled.
In fact, Ritu’s loan insurance plan even provides a payout in case she dies in an accident.
The HDFC Credit Protection plan does all this and more. Anyone aged between 18 and 70 years is eligible for such an insurance plan. The application process is quick and easy. Moreover, this is a single-premium plan. So, policyholders need not worry about missing a payment or the cover getting lapsed.
The amount of premium charged varies from case to case. It depends on the nature of insurance being sought. Moreover, the HDFC Credit Protection plan is not just for home loans. You can avail it for other kinds of loans as well, such as education or personal loans, or even credit card debt. But the type of loan will have an impact on the premium amount.
Besides, policy buyers can choose between a level cover and a reducing cover. Ritu went for the latter option because the balance payable on her home loan would keep decreasing.
The HDFC Credit Protection plan is a great safeguard if you have liabilities. By taking over your debt burden, it provides financial reassurance to your family. The death benefit further reduces the monetary load on your family after your demise.