Home loan insurance (Home Loan Protection Plan-HLPP) is a protection plan designed to cover the outstanding home loan liability if the borrower passes away during the loan tenure. It helps protect the borrower’s family from the financial burden of repaying the remaining loan amount.
At the same time, it reduces the lender’s risk by ensuring that banks or financial institutions can recover the outstanding loan in the event of the borrower’s death, disability, or loss of income. The policy term is generally aligned with the duration of the home loan.
| Fact | Detail |
| Also known as | Home Loan Protection Plan (HLPP) |
| What it covers | Outstanding home loan balance on death, and often on accidental disability or income loss |
| Who it pays | The lender directly (or the loan account), not the family, in most bank-linked HLPP plans |
| Policy term | Aligned with the home loan tenure |
| Is it mandatory? | No.Home insurance (covering the property) is often made compulsory by lenders; home loan insurance (covering the liability) is optional, though sometimes bundled at disbursal |
| Premium payment | Single premium (often added to the loan amount), regular annual premium, or EMI-linked |
| Alternative | A standalone term insurance plan can serve the same purpose. |
| Tax benefit | Premium may qualify under Section 80C, subject to conditions — confirm with your insurer/advisor |
Building your dream home is only half the job; protecting it from the burden of an unpaid loan is just as important. Since buying a home is one of the biggest financial commitments you'll ever make, home loan insurance helps ensure that an unforeseen event does not leave your family struggling with outstanding loan repayments. It can help pay off the remaining loan amount in situations such as death, accidental disability, natural disasters, or income interruptions that affect your ability to repay the loan.
The importance of home loan insurance is also reflected in changing consumer behaviour. According to a 2026 industry analysis, the adoption of home loan insurance increased nearly sevenfold within five months, indicating that more borrowers now view loan protection as an essential part of financial planning. The study also found that borrowers with larger home loans, particularly those between ₹50 lakh and ₹1 crore, are increasingly opting for home loan insurance to safeguard their long-term financial commitments.
Home loan insurance is important because it provides:
Protection to your family/dependents from the loan burden
Ensuring loan repayment continuity
Preventing financial stress during emergencies
Protecting the newly bought financed property
Supporting EMI payments during accidental disability
Home loan insurance can also be combined with life insurance to provide broader financial protection. While home loan insurance covers the specific liability of the housing loan, life insurance offers additional financial security to the family against other future expenses and obligations.
Home loan insurance is especially beneficial for the following entities:
Single-income families
Borrowers with long loan tenures
Joint borrowers where repayment responsibility is shared
Self-employed individuals with fluctuating income
Borrowers without adequate life insurance coverage
** Home loan insurance is especially relevant for borrowers taking high-value home loans or opting for longer repayment tenures. Recent industry trends also show growing adoption among salaried professionals and joint borrowers, particularly dual-income households, as they seek to protect their families from outstanding loan liabilities in the event of an unforeseen circumstance.
When you take a home loan of ₹50 Lakhs for 20 years, you are committing ₹40,000–₹50,000 per month in EMIs. If something happens to you mid-tenure, that EMI burden falls on your family, often forcing them to sell the very home you bought for them. Home loan insurance eliminates that risk entirely.
Example: Rahul, age 32, takes a ₹60 Lakh home loan for 25 years. He buys an HLPP for a single premium of ₹42,000. 8 years later, Ramesh passes away. The insurer pays the bank the full outstanding balance (approximately ₹52 Lakhs).
Let us take a look at the best home loan insurance plans available in India
| Best Home Loan Insurance in India | Entry Age | Max. Maturity Age | CSR | Sum Assured |
| HDFC Click 2 Protect Supreme - Life Goal | 18 years | 85 years | 99.7% | No Limit |
| Tata AIA SRS Credit Protect | 18 – 65 years | 95 years | 99.4% | 1 Crore |
| Aviva Life Signature 3D Term Platinum - Credit Protect | 18 – 65 years | 70 years | 99.1% | 25 Lacs - 5 Crores |
Disclaimer: +₹360/month is the starting price for a ₹99 lakhs loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10.
This plan offers a high life cover amount to safeguard the financial future of your family against unforeseen demise.
Option to select from different options such as Life, Extra Life, Income, and Extra income to match your financial needs.
It offers optional add-ons such as critical illness, and accidental death benefits to increase protection.
If the policyholder suffers from disability, future premiums may be waived.
Easy online purchase and plan servicing with fast issuance and lower premium rates because of online processing.
The plan has an inbuilt Payor Accelerator Benefit that pays up to 50% of the effective sum assured on the diagnosis of a terminal illness
No additional benefit is payable in case the policyholder survives the policy term.
The death benefit payable will be the effective sum assured as on the date of death.
You can choose to pay the premiums in a regular or limited premium pay term as per your convenience.
In case of policy surrender, the Unexpired Risk Premium Value is paid to the policyholder.
The plan offers financial protection to your loved ones in the event of the death of the policyholder during the policy term by paying off the remaining loan.
This is a decreasing term insurance plan where the cover reduces with the outstanding loan amount, throughout the policy term.
You can choose the base sum assured and policy term suited to your needs as per the details of the availed loan.
A sum at risk schedule is created at the start, showing how the coverage reduces each year. The reduction in cover is calculated on an assumed yearly repayment basis using a fixed interest rate of 11% per annum, regardless of your actual loan terms.
The death benefit starts equal to the base sum assured and reduces yearly as per the schedule, which means it may not always exactly match your actual outstanding loan amount.
In case of the insured’s death during the policy term, the sum at risk for that specific year, as mentioned in the policy schedule, is paid, and the policy ends
| Plan Type | How Cover Behaves Over the Loan Tenure |
| Level Cover Plan | The sum assured stays constant across the entire loan tenure, regardless of how much of the loan you've repaid. |
| Reducing Cover Plan | The cover amount decreases in step with your outstanding loan balance — cheaper over time, since you need less cover as the loan shrinks. |
| Hybrid Cover Plan | Full cover in the initial period, which then starts reducing in line with the loan balance as the tenure progresses. |
Practical implication: a Reducing Cover Plan is usually the most cost-efficient choice if your only goal is to exactly match the outstanding loan balance at any point in time — a Level Cover Plan costs more but leaves your family with a lump sum larger than the loan balance in later years, which can double as a smaller legacy amount.
Home loan insurance not only protects your family from financial burden but also offers tax advantages under the Income Tax Act, 1961.
Section 80C Deduction
The premium paid towards a home loan protection plan is eligible for tax deduction under Section 80C of the Income Tax Act, up to a limit of ₹1.5 lakh per financial year. This deduction is available to the policyholder or borrower who pays the premium.
Section 10(10D)
In the event of the insured borrower's death, the benefit paid to the nominee is generally tax-free under Section 10(10D), subject to applicable conditions.
Important Note: Tax benefits are subject to changes in tax laws. It is advisable to consult a tax professional or CA before making a purchase decision solely based on tax saving.
Reducing Cover
Premiums up to 40% lower than level cover
Cover always mirrors your outstanding loan
Best for borrowers whose primary liability is the home loan
Joint borrower cover available
Payout always equals full sum assured
Family receives surplus beyond loan balance
Works as additional life insurance coverage
Better if you want wider financial protection
This type of home loan insurance typically offers comprehensive accident-linked financial protection through the following benefits:
Loan Secure Benefit
The Loan Secure benefit helps protect the borrower's family from outstanding home loan liabilities in the event of severe accidents. Under this feature, the insurer pays the outstanding home loan amount if the insured borrower suffers accidental death, Permanent Total Disability (PTD), or Permanent Partial Disability (PPD), as per policy terms & conditions. This benefit ensures that the borrower's dependent is not burdened with unpaid loan obligations during financially difficult times.
EMI Protect Benefit
EMI Protect is one of the most important features of a Home Loan Secure Plan. This benefit helps continue EMI payments if the insured borrower becomes disabled due to an accident and temporarily loses earning capability. The insurer pays the EMIs for a specified period as per the policy schedule.
Accidental Death Cover
This feature provides financial protection if the insured borrower dies due to an accident during the policy tenure. The benefit amount may be used to repay outstanding loan liability, support surviving family members, and maintain financial stability during tough times. This accidental death protection is especially important for borrowers who are the family's primary earners.
Permanent Total Disability (PTD) Cover
Permanent Total Disability refers to situations where the insured becomes completely disabled due to an accident and is permanently unable to work or earn income. This offers coverage for: Loss of both limbs, Total loss of eyesight, Paralysis, Other permanent disabling injuries covered under the policy. Under PTD cover, the insurer provides compensation in accordance with the policy terms, which helps repay the loan or meet financial commitments.
Permanent Partial Disability (PPD) Cover
Permanent Partial Disability refers to partial but irreversible loss of physical function caused by an accident. This offers coverage for: Loss of one limb, Loss of fingers, Partial loss of eyesight, Permanent loss of hearing in one ear. Under PPD coverage, compensation is paid based on the severity of the disability, and the payout percentage depends on the policy terms and the disability schedule.
Additional Protection Benefits
Many Home Loan Secure plans may also include supplementary accident-related covers, such as: Hospital Cash Benefit – It provides a fixed daily cash allowance during hospitalisation due to an accident. Accident Medical Expenses – It covers medical treatment expenses arising from accidental injuries, subject to policy terms. Air Ambulance Cover – It provides emergency transportation support during critical accidental medical situations.
The premiums under Home Loan Secure plan are often determined based on occupational risk categories. The insurer classifies occupations into three main risk categories.
Risk Category 1 – Low Risk Occupations
It includes office-based and non-hazardous jobs such as:
doctors
lawyers
accountants
teachers
office executives
Risk Category 2 – Moderate Risk Occupations
It includes occupations with some outdoor exposure or field work, such as:
builders
site engineers
electricians
farmers
drivers
These occupations may attract moderate premium rates.
Risk Category 3 – High Risk Occupations
It includes hazardous occupations such as:
construction workers
truck drivers
miners
police personnel
pilots
industrial workers
These occupations have higher accidental exposure and may lead to higher premium rates.
Many borrowers assume HLPP is their only option to protect a home loan but a standard term insurance plan can often do the same job, and sometimes better:
| Parameters | Home Loan Insurance (HLPP) | Term Insurance |
| Cover amount | Typically reduces with, the loan balance | You choose the sum assured independently, can cover the loan plus other family needs |
| Payout goes to | Usually the lender directly | Your chosen nominee, who can then decide how to use it (pay off the loan, or other priorities) |
| Portability | Usually tied to that specific loan/lender; may need a new policy if you refinance elsewhere | Fully portable, stays with you regardless of which bank holds your loan |
| Flexibility if loan is repaid early | Cover typically ends with the loan | Continues to protect your family for the full policy term, independent of the loan |
| Best if | You want a simple, loan-specific solution bundled with your home loan | You want comprehensive family protection (not just the loan) at potentially more competitive premiums |
The following reasons explain the importance of home loan insurance policy for homeowners in India:
It protects the family from outstanding home loan liabilities
It ensures continuity of EMI payments during emergencies
It safeguards the financed property against unforeseen damages
It reduces financial stress caused by accidents, disability, or death
It helps in maintaining long-term home ownership and financial stability
It gives peace of mind throughout the loan period
The claim process for home loan insurance typically involves:
Step 1 : Inform the provider immediately after any unfortunate event strikes.
Step 2: Submitting required documents. This might vary from provider to provider.
Step 3: Verification by the provider by checking all the required documents.
Step 4: At last, settlement of the outstanding loan amount directly with the lender.
The premium for home loan insurance depends on several factors, such as:
Age of the borrower
Loan amount and tenure
Type of home loan insurance cover
Health condition and medical history
Payment mode chosen
Note: The insurer may ask for other documents depending on their requirements.
The table below highlights the difference between home loan insurance & home insurance policy:
| Points of Basis | Home Loan Insurance | Home Insurance |
| Meaning | This means paying the policyholder's remaining or outstanding loan amount if an unforeseen circumstance does not allow them to repay the loan. | The means paying the financial loss or damage caused to the insured home structure or its contents due to several unforeseen risks. |
| Coverage | Helps in paying the outstanding loan amount in case of any casualty to the policyholder. | Helps in securing the insured home structure and the household items from various risks defined in the policy wordings. |
| Down Payment | It minimises the down payment (EMIs) on your house. | No impact. |
| Purchase Process | You can only buy it if you already have a home insurance policy. | It can be purchased regardless of whether the individual has a home loan. |
A home loan insurance calculator is an online tool that helps borrowers estimate the premium amount for protecting their home loan against unforeseen risks such as death, accidental disability, EMI interruption, or property damage. The calculator provides an approximate premium based on multiple factors, such as:
Home loan amount
Loan tenure
Age of the borrower
Occupation risk category
Type of insurance coverage selected
Add-on benefits like Loan Secure or EMI Protect
By using a home loan insurance calculator, borrowers can easily compare different coverage options, understand premium affordability, choose suitable protection benefits, and estimate the cost of securing their home loan. Using this calculator before purchasing home loan insurance helps borrowers make informed financial decisions and choose the right level of protection for their home loan obligations.
Most borrowers think of home loan insurance purely as personal protection. But there is an equally important perspective on the lender's side that explains why banks actively recommend it.
When a borrower takes a home loan, the lender carries significant financial risk across a tenure that can span 15 to 30 years. If the borrower passes away or becomes permanently disabled, the lender faces the risk of loan default and the complex, time-consuming process of recovering the outstanding amount, which may include legal proceedings or property auction.
Home loan insurance eliminates this risk for the lender by ensuring the outstanding loan balance is settled directly by the insurer. This is why many banks recommend or bundle home loan insurance with the loan at the time of disbursal.
Yes. If you have taken a joint home loan with a co-borrower, such as a spouse or a parent, a single home loan insurance policy can be structured to cover both borrowers under the same plan.
This is particularly relevant because in joint home loans, both borrowers share repayment responsibility. If one borrower passes away, the entire EMI burden shifts to the surviving borrower, which can cause significant financial strain.
Home loan insurance plans offer flexible premium payment structures to suit different borrower preferences and financial situations.
Single Premium
The entire premium is paid as a one-time lump sum at the time of policy purchase. This is the most common structure when the insurance is bundled with a home loan at disbursal. While convenient, borrowers should note that if the loan is prepaid or foreclosed, a proportionate refund of the unused premium may or may not be available depending on the insurer's policy.
Adding Premium to EMI
Some lenders allow the insurance premium to be added to the home loan amount itself, meaning it gets incorporated into the monthly EMI. While this is convenient, it also means you pay interest on the insurance premium as part of the loan, increasing the overall cost. Borrowers should evaluate this carefully before opting in.
A standard home loan insurance plan covers the outstanding loan in the event of death. However, life's uncertainties go beyond just death. Riders and add-on covers allow you to extend the scope of your protection at an additional premium. The riders are:
Critical illness rider
Accidental death benefit rider
Waiver of premium rider
Permanent disability rider
No, taking insurance for a home loan is not legally or officially mandatory. Regulatory bodies like the Reserve Bank of India (RBI) do not force borrowers to buy insurance to get a home loan, but banks may strongly encourage or nudge you to buy it.
Premiums depend on your age, loan amount, loan tenure, health, and the type of cover chosen (Level, Reducing, or Hybrid):
Reducing cover plans are typically the least expensive, since the insurer's risk decreases as your outstanding loan balance falls.
Level cover plans cost more for the same loan amount, since the cover doesn't decrease over time.
Premiums are generally cheaper the younger and healthier you are at the time of taking the loan the same principle as term insurance.
As a rough frame of reference, protecting a ₹50 lakh–₹1 crore home loan can cost anywhere from a few thousand to tens of thousands of rupees a year, depending on the factors above. Always get a personalised quote rather than relying on a rough estimate, since loan amount and tenure significantly change the number.
Here is how you can buy the best home loan insurance in India from Policybazaar:
Step 1: Visit the term insurance for home loan page of Policybazaar
Step 2: Fill in your name, gender, and other contact details
Step 3: Select the right annual income, educational qualifications, occupation type, and smoking habits
Step 4: Choose the best home loan insurance policy in India and proceed to pay the premiums
Yes, taking home loan insurance is generally worth it because it protects your family from debt, secures your property, and prevents loan default. However, burying a standard term life insurance policy rather than a bank-offered policy is often a smarter, cheaper choice.
Canara HSBC Life Insurance Promise2Secure is a non-linked
Read more
NRI home loan interest rates in India currently range from 8.40%
Read more
ICICI Pru iProtect Care is a comprehensive term insurance plan
Read more
Tata AIA Life Insurance has launched a student-focused term
Read more
Home loan interest rates in West Bengal typically range between
Read more˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.
Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in
+On the basis of your profile
+Rs. 410/month is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10
+Rs. 410/month (Rs.14/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age rounded off to nearest 10
+Rs. 245 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10
+Rs. 15/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10
+Rs. 504/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 494/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 636/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 918/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 1,286/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 453/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs.582/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 786/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 1,374/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 1,592/month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 525/month is the starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 68 years of age.
+Rs. 668/month is starting price for a 2 crore term life insurance for an 25 year-old male, non-smoker, with no pre-existing diseases, cover upto 45 years of age.
+Rs. 1,200/month is starting price for a 2 crore term life insurance for an 35 year-old male, non-smoker, with no pre-existing diseases, cover upto 55 years of age.
+Rs. 410/month is starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 577/month is starting price for a 1 crore term life insurance for an 18 year-old Male, self employed, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.
+Rs. ₹361/month is the starting price for a ₹1 crore loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10
Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited
We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881
For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale
Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.
© Copyright 2008-2026 policybazaar.com. All Rights Reserved
˜ Policybazaar Promise reflects the guarantee offered by insurers. Price assurance is based on certifications shared by insurers with us.
Insurance
Calculators
Payment Methods
Secured With
Follow us on
