I have a term insurance coverage of Rs 30 lakh. Recently I got a Rs 1 crore home loan sanctioned from a public sector bank. Now I am wondering if I should take home loan insurance cover or just hike the term insurance coverage. Which one will be the better option? Also, how do I decide how much home loan or extra term cover I need?
-- Tarun Maheshwari
By Santosh Agarwal, CBO-Life Insurance, Policybazaar.com
It is good to know that you already have a term life insurance plan. A term insurance plan is the best financial option that fulfills the requirements of your family. It is the most cost-effective finance solution for any individual. It ensures financial security, protection, and peace of mind for your family. When you invest in a term insurance plan, your intention would be to leave a sufficient amount of money for your family in case you die before you fulfil all your financial obligations.
Considering your liabilities, you should definitely increase your current term insurance cover up to Rs 2 crore. This will help your dependents to repay the home loan and pay for their daily expenses in case of your sudden demise. A term insurance plan fulfills the requirements of your family, even in your absence, and helps them continue their lifestyle standards and survival. It will not only cover the policyholder for death, disease and disability but also gives him/her peace of mind. Upgrading your term insurance is buying a new policy altogether, unless done within 30 days of buying. You will have to go through the whole documentation process again. You may even choose to discontinue your current term plan and buy a new plan with a sum assured of Rs 2 crore. A term insurance plan for a 40-year-old male with coverage up to 60 years costs around Rs 2,500-3,000 per month. It is the most cost-effective financial solution.
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