HLPP Vs Term Insurance

Buying a own house is one of the important aim of nearly every Indian family. The common selection for financing your house is choosing a home loan option. But, what in case something unfortunate happens to you before paying the complete loan? The debt or loan repayment is passed on to your family. So, do you want to leave your family under financial stress?  House buyers have 2 options – one is to avail of a home loan along with a home loan insurance or buy a term insurance plan.

Read more
Get ₹1 Cr. Life Cover at just
Term Insurance plans
Online discount
upto 10%#
Claim Support
Policybazaar is
Certified platinum Partner for
Claim Settled

#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply

Get ₹1 Cr. Life Cover at just
View plans
Please wait. We Are Processing..
Get Updates on WhatsApp
By clicking on "View plans" you agree to our Privacy Policy and Terms of use
We are rated
58.9 million
Registered Consumers
26.4 million

A term insurance plan secures your loved ones for the tenure of the home loan. If something unforeseen happens to you in that time, the death benefit from the plan can be used to pay the rest of the amount. On the other hand, home loan insurance protects your loved ones from unfortunate events by settling the unpaid home loan. 

To understand this concept in detail, let’s discuss two types of insurance: term insurance and home loan insurance – and their pros and cons that will help you in making a wise decision about staying financially secured.

What is Home Loan Insurance? 

Home Loan Insurance (HLI) is also called Home Loan Protection Plan (HLPP). This is a plan introduced by almost every financial/lending institution in which the insurance company pays the unsettled balance amount of their home loan to the lender or bank if the debtor dies because of unexpected circumstances. In this, the term of the plan and the loan is generally the same. So, by buying a home loan insurance plan, borrowers make sure that their loved ones will not have to pay the home loan because of non-payment of the balance of the loan after their demise. 

What is Term Insurance Plan? 

Term insurance is a pure life insurance product that offers financial stability and protection to the policyholder for a specific time period. In the case of the policyholder’s death during the policy term, the nominee/beneficiary receives a death payout as defined under the chosen term plan. 

For instance: The premium amount for Rs. 1 Crore Term cover could be as minimum as Rs. 500 per month. This fixed amount of premium can be paid once or at regular intervals of time for the entire policy tenure or for a limited time. Premiums vary based on the premium payment type opted by the policy buyer. 

Different types of Plans

HLPP Vs Term Insurance 

The two protection policies that can secure the borrower from the risk of non-repayment are beneficial for both the borrower and the lender. Let’s discuss some of the important differences associated with term insurance and home loan insurance: 

  1. Premiums

    Premium amounts are paid in a lump sum form for a home loan insurance plan. This 1-time payment makes the rates of premium higher than other plans. Also, the premium amount for home loan insurance plan is added to the amount of the home loan. Premiums of a term plan are lesser than home loan insurance. A term insurance calculator is used to calculate the premiums and it is paid yearly, bi-yearly, quarterly, or on a monthly basis. So, a term plan is much more economical than home loan insurance.

  2. Coverage of plan 

    The term plan provides financial coverage for a fixed period of a lifetime and if the insured passes away within the fixed time, then the death benefit is paid to the beneficiaries in a lump sum form with which your loved ones can repay the home loans. After the policyholder’s death, the term plan can settle any type of unpaid debt, thus securing the loved ones from the unexpected financial stress of paying the loan back. This decreases the risk of experiencing bad debts as the term plan will discharge the unpaid liabilities. 

    On the other hand, the home loan insurance covers the debtor for the duration of repaying the loan. This insurance expires when the unpaid loan amount has been paid. Similarly, the coverage amount reduced as the loan amount gets repaid. In case the debtor passes away within this tenure, then the loved ones can claim the loan insurance to pay off the unpaid amount of loan. 

  3. Tax Benefits

    According to section 80C of ITA, a tax-payer can file a claim of deduction of up to 1.5 Lacs from the taxable salary. A policyholder availing term plan is eligible for this tax deduction. Home loan insurance provides the same tax savings benefit u/s 80C as the home loan premium amount is added to the home loan. This majorly depends on the term insurance tenure and the home loan to assess the tenure of the tax benefits. 

  4. Rider 

    Both protection plans, term insurance, and home loan insurance have rider benefits that cover specific conditions such as accidental deaths, critical illness, and job loss. These term riders increase the insurance plans. So, the home loan insurance plans with these riders typically have a higher price than the basic plans. 

Wrapping It Up!

After discussing all the pointers discussed above, it is clear that the decision of choosing a specific plan solely depends on the financial needs of an individual. However, various experts suggest term insurance over a home loan protection plan, as the previous one offers large cover, maximum flexibility, and helps the family of the borrower to face financial liabilities in the future.

Different types of Plans

Term insurance articles

Recent Articles
Popular Articles
Best Term Life Insurance in USA

01 Feb 2023

A term life insurance in USA can secure your family against the
Read more
Tata AIA Term Insurance Login

26 Dec 2022

Tata AIA term insurance login portal offers the company’s
Read more
Why NRIs in UAE Should Buy Term Insurance Plans from India?

08 Dec 2022

Term life insurance plan secures the financial future of your
Read more
Best Term Life Insurance Plans in Singapore

07 Dec 2022

An NRI living in Singapore can easily buy the best term life
Read more
Bima Sugam

29 Nov 2022

Bima Sugam is an online marketplace that will offer its services
Read more
LIC Term Insurance 1 Crore
LIC of India offers various plans to help you secure the financial future of your loved ones. In order to make
Read more
What Medical Tests are Required for Term Insurance?
Term insurance offers a sum assured to the beneficiary of the policyholder upon their death that can help them
Read more
Term Insurance: Tax Benefits under Section 80D
Term Insurance provides financial security and protection to your family in case of your unexpected death within
Read more
2 Crore Term Insurance Plan
The pandemic has surely generated a global panic and emphasised the importance of financial planning that would
Read more
Types of Deaths Covered and Not Covered by Term Insurance
A term insurance plan is the best way to ensure the financial well-being of your family members in case of any
Read more

View Plans
Download the Policybazaar app
to manage all your insurance needs.