Benefits of Credit Life Insurance for Indian Borrowers

Nowadays, loans are a part of everyday life. Home loans, personal loans, education loans, car loans, etc, have become a normal financial tool for Indian households. While borrowing helps in meeting important and urgent goals, it also creates a long-term financial responsibility. Credit Life Insurance is designed to protect borrowers and their families from the risk that comes with the outstanding loans.

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What Is Credit Life Insurance?

Credit life insurance is a type of life insurance that protects your family against an outstanding loan. If the borrower passes away during the loan tenure, the insurance company will pay the outstanding loan amount directly to the lender. The debt is paid by the insurance company and the policy ends. The family does not receive a cash payout.

In India, credit life insurance is commonly offered with home loans, personal loans, MSME loans, vehicle loans and sometimes large credit card balances. The cover usually reduces over time as the loan balance comes down.

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What are the Benefits of Credit Life Insurance?

Protects the Family From Inheriting Loan Debt
If a home loan, personal loan, or business loan remains unpaid, the legal responsibility often shifts to the co-applicant or the legal heirs. Credit life insurance makes sure that when a person dies, the insurance company pays off the loan directly to the lender. This helps make sure that the family doesn't have to pay back EMIs, sell their savings, or sell their assets under pressure.
Prevents Forced Sale of Property or Assets
If a home loan, personal loan, or business loan remains unpaid, the legal responsibility shifts to the co-applicant or the legal heirs. With Home Loan insurance, one can make sure that after their death, the outstanding loan is settled directly with the lender. This makes sure that the family does not have the burden to repay EMIs, liquidate savings, or sell assets under pressure.
Shields Co-Applicants and Guarantors From Legal Recovery
If a home loan, personal loan, or business loan remains unpaid, the legal responsibility shifts to the co-applicant or the legal heirs. With Home Loan insurance, one can make sure that after their death, the outstanding loan is settled directly with the lender. This makes sure that the family does not have the burden to repay EMIs, liquidate savings, or sell assets under pressure.
Indian lenders have the right to recover outstanding dues from co-applicants or guarantors if the primary borrower passes away. This is common in home loans, MSME loans, and education loans. Credit life insurance protects these individuals by closing the loan account entirely, preventing legal notices, credit score damage, and strained personal relationships.
Designed to Protect Loans
Credit life insurance differs from term insurance in that it only pays off a loan. The amount of coverage is equal to the amount of the loan that is still outstanding, and it decreases as the loan is paid off. This makes it a focused, liability-driven cover instead of a broad financial product. This is ideal for individuals seeking targeted protection without the need to contend with numerous issues.
Quick Approval with Few Underwriting Steps
In India, credit life insurance plans don't have many requirements for getting them, and most of the time, you don't even have to take any medical tests. Therefore, these products are more accessible to older individuals and those with minor health issues, as they may not be able to obtain term insurance otherwise.
Seamless Integration With the Loan Lifecycle
Credit life insurance is meant to last as long as the loan does. Premiums are often paid in full, once a year, or as part of an EMI, which makes things easier for the company. There is no extra burden of managing multiple policies, which is good for borrowers who want things to be simple.
Important for Self-Employed Borrowers or MSMEs
Credit Life Insurance helps people who own a small business or are self-employed. Having a Credit Life Insurance protects their personal finances from business loans, and helps families to run their business peacefully

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Summing It Up

Credit Life Insurance gives Indian borrowers focused, practical protection against one of the biggest financial risks: loans that are not paid back. It protects families, co-applicants, and assets without having to go through a lot of steps or get medical checks. If you have a lot of debt and want to make sure your family doesn't have to pay it off, credit life insurance is a smart way to plan your finances. It might not be flashy, but it does what needs to be done when needed.

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FAQs

Is it possible to get credit life insurance without getting a loan?

Yes. Many banks and lenders automatically include credit life insurance with loans, but you can also buy a separate credit life policy for a loan you already have. This lets you cover more than one loan or change the coverage to fit your needs.
Will my family get money from credit life insurance?

No. The insurance is meant to pay off the loan that is still owed. Your family doesn't get any cash, but the loan is paid off, which keeps them from having to worry about money.
Who can get credit life insurance?

Anyone who has a loan for their home, business, car, education, or personal use can benefit. It is very helpful for co-applicants, guarantors, self-employed borrowers, and families who don't want to pass on debt.
How do you figure out how much coverage you need?

Most of the time, the coverage amount is the same as the amount still owed on the loan. The coverage goes down over time as you pay back the loan. This makes sure that the insurance is always exactly what you need.
Will my credit score go down if I die and still owe money?

When you have credit life insurance, the lender gets the payment directly from the insurance company. This closes the loan account and keeps your co-applicants or family from having to deal with legal problems or bad credit.

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˜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

Rs. 400/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. 400/month (Rs.13/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.

+Rs. 230 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. 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. 12/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. 497/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. 487/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. 626/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. 905/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. 1,267/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.

*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. 447/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.679/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. 910/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. 1,924month 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.

Women

+Rs. 400/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, rounded off to nearest 10.

Rs. 461/month is the starting price for a 1 crore term life insurance for an 24 year-old female, non-smoker, with no pre-existing diseases, cover upto 54 years of age.

1,642/month is the starting price for a 1 crore term life insurance for an 44 year-old female, non-smoker, with no pre-existing diseases, cover upto 74 years of age.

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.

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