Life cover vs home loan protection
There is the good sales pitch. And there is the bad sales pitch. And between them is the not- so-bad sales pitch. Before you start scratching your head on what we mean, allow us to clarify. When an insurance agent asks you to invest in a unit linked insurance plan (Ulip), promising that your money will triple in 5 years, that’s the bad sales pitch. The money may or may not triple in 5 years. There are no guarantees.
When a financial planner asks you to buy a term insurance to insure your life, that’s the good sales pitch. In case something was to happen to you, your family will be financially secure. In between these lies the not-so-bad sales pitch, which you might just knowledge while applying for a home loan to fund your dream home.
The marketing manager at the bank/housing finance company (HFC) will try to sell you an insurance policy along with the home loan. Now, this is the not-so-bad sales pitch. The manager will tell you that if you buy this insurance policy, known as the home loan protection plan (HLPP), along with the home loan, then in case of your unforeseen demise, the insurance company will pay the bank the principal amount of the remaining portion of your home loan. This, in turn, means that your family can continue living in the dream house.
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