Understanding the Difference Between Home Insurance and Home Loan Insurance
Insurances of all kinds give us assurance of safety against the unfortunate events of life. One must have insurance policies for all the valuables including homes and home loans. Both the home loan and home insurance loan are related to your home, but the features and benefits of both products are different. Many a time, insurance buyers are found to get confused between both the products. Both the insurances cover different kinds of risks on your property. Here in this article, we have bought an insight as well as the comparison of both the products.
What is Home Insurance?
A home loan insurance covers the home and its appliances form any kind of unwanted events. This insurance gives you protection against any kind of damage to the home and its belongings. The terms of coverage depend on the kind of insurance you have purchased, however, most insurance policies cover perils like hail, thunderstorms, fire, and theft. Some home insurances even give you protection in the event that someone is injured on the homeowner’s property. A home loan insurance also covers the cover the cost of maintenance such as such as replacing the damaged parts, the wall fixtures, garages, outbuildings etc.
What is Home Loan Insurance?
A home loan insurance gives the buyer protection on the home loan which has been availed by the buyer for purchasing the particular home. The home loan insurance is also known as Home Loan Protection Plan (HLPP). Under this insurance plan, the insurance provider promises to settle any amount of home loan outstanding amount in the case of disability to repay the loan or death of the borrower. The term of the policy generally stretches as long as the tenure of the loan but one can opt for a lower term also. A home loan insurance makes the insurance holders assured that his/her family will not have to evacuate the home due to non-payment of the home loan. If such situations arise, the insurer will pay off the outstanding loan amount and the property will be transferred to the legal heirs of the borrower of the home loan.
The Difference Between a Home Insurance and Home Loan Insurance
Even though both are insurances sound similar, but they serve totally different purposes. Home insurance keeps the house protected from any kind of damages comes to the home. A home loan insurance plan is also known as homeowner’s insurance which offers coverage of your home and its content. But if you default in your home loan and the lender seizes your home, your home insurance will not give you protection.
On another hand, home loan insurance provides cover for the borrowed amount of home loan against non-repayment of the loan EMIs. It means that a home loan insurance is an exclusive insurance plan for the home loan. Another significant difference between a home loan and home construction loan is that can the home insurance loan rates are cheaper than home loan insurance policy.
Which is Better: Home Insurance or Home Loan Insurance
Both the home insurance and home loan insurance are important for a person who has a home and a home loan. A home insurance price is lesser than a home loan insurance price. A home loan insurance becomes a necessity if your income is not stable. In such cases, one must buy a home loan insurance which covers the disability of the borrower to pay off the loan.
Most of the lenders ask the borrower to buy a loan protection policy as it makes the home loan less risky. If a borrower buys a home loan protection plan for the entire tenure, the chances of NPA gets equal to nil. In this way, one can get a higher amount of loan.
In the same way, home insurance is also equally important. It saves you from being worried form a number of unprecedented events that can happen to your home.
Hence, both the insurances are equally important and one should have both of them.