Home Insurance VS Home Loan Insurance?

Buying the perfect home for our family requires a lot of effort, savings, hard work, and patience, despite how simple it may seem. If you have bought a house, you must already know how true this is. But let me tell you, in the long run, the hustle continues even if you invest in your ideal home. That is why it is strongly advised for all homeowners to secure their homes. But when applying for home loan insurance I wasn’t really aware of the difference between home loan and home insurance. But I had some people who guided me quite well.

Most often, banks or reputable financial organisations offer homeowners loan insurance plans. By doing so, they are able to keep their space without having to cut back on necessities. However, the words "home insurance" and "home loan insurance" are frequently used interchangeably by the public. So, I will tell you what these words mean and then I will tell you the difference between them.

What is Home Insurance?

A good home insurance policy or plan will typically protect the house and its contents from any unforeseen loss or harm. One can safeguard their assets and homes from damage brought on by calamities, theft, etc., whether they are man-made or natural.

The policy provides two covers: content damage cover and structural damage cover, to elaborate on home insurance a little. While structural damage covers ensure that financial help is only provided if the property's structure is damaged, content damage covers ensure that financial support is provided for damage or loss to the property's content (damage to appliances, furniture, etc.).

The good news is that both the landlord and the tenant can purchase property insurance. But take notice that only content damage will be covered for the tenants. This is so because they don't own the property.

What is Home Loan Insurance?

A perfect home loan insurance policy would include coverage for all home loan liabilities. This occurs when the borrower is unable to make debt payments because of unusual hardships. When the borrower is unable to make the monthly home loan instalments, they are paid on their behalf.

However, the coverage for house loans may differ from one provider to another. The cost of repaying the debt in the event of the homeowner's/unexpected borrower's death is covered by a number of insurers. Similarly to this, some insurers will cover the debt if the borrower contracts a serious sickness, loses their job, or becomes disabled. Without a doubt, make sure to read the insurance policy's terms and conditions so that you are immediately conscious of the details.

When someone only has a small amount of savings but wants to buy a house or property early in life, home loan insurance coverage is ideal. This is so that the insurer will ensure loan repayment. The home loan policy gives you the choice of paying off the debt in one lump sum or several payments at regular intervals.

A benefit of the home loan insurance policy is that, according to insurance regulator IRDAI, banks cannot decline to give a borrower a home loan simply because they don't want to accept a package deal. Buying home loan insurance might not be the best option if you intend to repay the debt within a short period of time. However, investing in this house loan cover is essential if you plan to take out a longer-term loan.

Home insurance vs home loan insurance

I hope I was able to help you understand the difference between home loan and home insurance.