When it comes to protecting your home and financial investment, it's crucial to understand the differences between home insurance and home loan insurance.
From buying a dream home to getting good home insurance to secure it, the whole process holds the utmost importance for any individual. If you have purchased a home with the help of a loan, then it is also very important to know about the home loan insurance. Here's a comprehensive comparison to help you make an informed decision.
Home Insurance (Meaning & Its Benefits)
Home Insurance is a policy that is specifically designed to protect your home and its important belongings from unforeseen events or calamities including theft, fire, flood, earthquake, and others. Notably, home insurance also covers expenses for renovating the home and repairing or replacing damaged or lost items as well. Now, let’s underscore some of the major benefits of Home Insurance:
- Property Damage Coverage: Home Insurance Provides coverage for your property damaged by natural disasters, vandalism, or theft.
- Personal Belongings Coverage: In case the furniture, electronics, clothing, and other valuables, in case they are damaged or stolen, the Home Insurance provides coverage for the homeowners.
- Liability Protection: Home Insurance provides covers for the legal fees and medical expenses, in case someone is injured on your property or in case you have caused some damage to another person’s property.
- Additional living expenses: In case your home is being repaired under the coverage, the Home insurance also covers your temporary living expenses, such as hotel bills, restaurant meals, and other costs.
Also read: Home Insurance Claims- Step-by-Step Guide
Home Loan Insurance (Meaning & Its Benefits)
To buy a new home, a sizable amount is taken by an individual as a Home Loan, which makes it necessary to buy home loan insurance, in case, if you are unable to pay back the loan due to unforeseen events. In case you cannot afford the payment of the home loan, the home loan insurance pays for the monthly home loan installments (EMIs). Providing financial security to your family, this type of insurance plays a key role in protecting you from the risk of defaulting on your home loan. The home loan insurance calculator helps you with the calculation of the premiums that need to be paid and how much insurance should be purchased. Below mentioned are some of the major benefits that are offered by home loan insurance:
- Protection Against Loan Default: The home loan insurance pays for your monthly home loan EMIs, in case you are unable to do so due to job loss, disability, or other financial hardships.
- Family Security: It financially secures the family from the home loan, in case of the policyholder’s untimely death, ensuring that the family is not burdened by the debt.
- Financial Stability: Home loan insurance brings about a lot of peace of mind for the policyholder, knowing that the home loan obligation will be met even in difficult times.
- Comprehensive Coverage Options: Backed by a wide array of coverage options, home loan insurance offers critical illness riders, disability benefits, and unemployment protection to meet the needs of the policyholder.
Home Insurance VS Home Loan Insurance
Though both are typically insurance, their nature differs from each other in several aspects. Let’s know how home insurance and home loan insurance are different from each other:
| Home Insurance | Home Loan Insurance | |
| Premium | In this type of insurance, the premiums are much lower as compared to that of a Home Loan Insurance. | The premium is much higher as compared to that of home insurance. |
| Availability | Whether you have a home loan or not, you can buy Home insurance for your house. | Home loan insurance can be purchased only if you have a Home loan for your house. |
| Down Payment | Home insurance has no impact on the down payment. | Home loan insurance reduces the down payment on your house. |
Wrapping Up!
When it comes to safeguarding your home and financial stature, both home insurance and home loan insurance are different but play crucial roles. Though home insurance focuses on preserving the owner’s property and belongings, home loan insurance ensures that the policyholder's financial obligations to the lender are met in difficult situations. A homeowner must do his part of the market research & understand the home loan insurance calculator, and home loan insurance premium calculator to make informed choices between the types of insurance available in the market. Choose the right home insurance or home loan insurance for your property, and secure your home and family against a wide range of potential challenges.
Frequently Asked Questions:
Q. Is home loan insurance mandatory?
A. Home loan insurance is mandatory in cases where the borrower is unable to meet the lender's requirements for a down payment or creditworthiness.
Q. What is a home loan insurance premium calculator?
A. The home loan insurance premium calculator assists the borrower in estimating the cost of the mortgage insurance depending on the loan amount, down payment, and others. This type of calculator is also available online.
Q. What do you understand about property insurance for home loans?
A. Property insurance for home loans is a type of insurance that typically covers the physical structure of the property, ensuring that the loan is secured, and the homeowner & lender are protected against unforeseen damage or loss.
Q. What factors are considered to determine the premiums for home insurance and home loan insurance?
A. The premium for home insurance is determined by factors like the value of the home, location, or coverage amount, while the premium for home loan insurance is based on the amount of the loan and the borrower’s credit risk.
Q. Who gets the benefit from the home loan insurance?
A. A lender gets the benefit of home loan insurance as it protects the interest of the lender and pays back the loan to him, in case the original borrower defaults on the loan.
