Who will handle your liabilities after you die?
Pratik Ghosh, 45, passed away last week after a prolonged illness. In December 2015, after many months of feeling unwell, the corporate lawyer finally went to a doctor. The doctor ordered a battery of tests. By the end of it, the prognosis was not good. Pratik had an aggressive form of cancer. It was only a question of time until he passed away.
Within a few weeks of the diagnosis, Pratik was too ill to go to work. His income reduced drastically. Meanwhile, the pile of medical bills kept growing. His savings were almost wiped out by the end.
Around this time, Pratik was paying equated monthly instalments (EMIs) on a home loan. He had paid off quite a bit, but a balance of about Rs 10 lakh was pending. He continued to pay the EMIs from his savings through the course of his illness. But when he died, the burden fell on his wife, elderly parents, and teenaged son.
The burden of liability
When he took the home loan and bought the new house, Pratik was perfectly healthy. He was working hard, and getting promotion after promotion. He was in line to get the top job at his law firm. He had bought a car and financed his dream house. The family vacationed abroad every year. Pratik was also saving up for his son’s higher studies.
He had no liabilities other than the home loan. Besides, he had already paid off half the amount. But his illness threw everything out of gear. When he died, the hospital expenses had taken a toll. His wife and parents were hardly in the financial space to afford the home loan EMIs.
A better option
Loan insurance would have provided some respite to the Ghosh family. This type of insurance provides financial reassurance to the dependents of the policyholder. The insurance takes over the policyholder’s debts at the time of his demise. Thus, the loved ones of the deceased do not have to cope with the added stress of debt.
In Pratik’s case, the loan insurance would have repaid the Rs 10 lakh home loan when he died. Some types of loan insurance policies even offer a death benefit. This comes in handy when an income-earning member of the family dies.
Such policies typically are available as single-premium plans and are renewable yearly.
Get financial assurance
The Future Group Term Loan plan belongs to this category of insurance. It covers any outstanding loan left behind by the deceased. That means the deceased’s family members do not have to repay these liabilities. This can come as a huge relief for a grieving family.
The Future Group Term Loan policy is a single-premium plan. Moreover, the policy buyer can fund the premium through the loan if taking both at the same time. Anyone aged between 18 and 60 years is eligible for this policy.
This type of insurance can be an integral part of long-term liability planning. Apart from debt repayment, the Term Loan plan also offers a death benefit. Besides, you could also avail a critical illness rider covering up to six critical conditions:
- Coronary bypass surgery
- Heart attack
- Kidney failure
- Major organ transplant
Of course, this coverage would be subject to certain terms and conditions.