Term Insurance Plans vs Home Loans: Which is Better?

Nov 28, 2018 | 4 months ago | Read Time: 3 minutes | By iKnowledge Team

Term Insurance Plan vs Home Loan

If you are wondering whether you should buy a pure term insurance plan or opt for home loans, we clear your doubts.

To keep yourself financially stable lifelong, you need to take your financial decisions carefully. If you are not able to manage your finances and spend a lot of money in buying things, there are chances you might face financial crisis in your life. This piece of advice suits best for individuals who have just started earning and are planning to live independently.

When people plan to live independently, their first requirement rounds upto owning a house. However, it’s important to understand what are home loans and how term insurance plays an important role here:

What are home loans?

Buy a home is expensive in today’s time, unlike earlier, you need to pay a hefty amount as down payment for a simple 1BHK flat. Since, you have just started earning, you might be able to buy a house soon with the help of a home loan. It is important to know that housing loans have hefty amounts involved and need proper planning even before you apply for it.

The first step towards planning for a home loan is to see whether the EMI fits your budget.

Most people who lose their home to banks due to the inability of loan repayment and the most common reason is- unaffordable EMIs. There are many reasons when banks face situation and one of the common reason they hear is the death of the loan applicant. Basically, loan applicants are breadwinners and bear the expense of the entire house on their shoulders. In the event of the death of such a person, the entire family becomes helpless and falls in financial crisis. To avoid putting your family in such situations you can consider buying a term insurance.

How term insurance can help you with home loans?

Life insurance is one of the essential financial assets you need to have; and term insurance is one of the best policies you can think of to cover your home loan. A term insurance policy offers comprehensive cover to the policy holder and provides the sum assured to the nominees only if the insured dies. It is the policy with the lowest premium and highest sum assured. A basic term insurance cover amount reaches upto the amount of Rs. 25 lakhs which can take care of your home loan for a longer period or it might even pay the loan.

Here are some other benefits of a term insurance:

  1. Accident cover: Term insurance have become customizable and with the addition of accident riders you can get insurance benefits if you meet with an accident. However, if you don’t want to get involved in the hassle of riders, you can opt for Aegon Life’s iTerm insurance plan.
  2. Death benefit option: A basic term insurance policy pays a substantial sum assured to the nominees at the death of the insured. Whereas, Aegon Life’s Easy Protect insurance plan offers additional death benefits like sum assured + constant payouts for a couple of years.
  3. Lower premiums: While you are already working hard to manage monthly EMIs for your house, it would be unfair if the burden of high premiums troubles you. Premiums for term insurance can be as low as a thousand rupees, depending on the habits of the policyholder. Whereas, some insurance companies offer additional benefits to the non-smokers by offering lower insurance premiums to the prospective policyholder. Such a benefit can make things not only easier for a policy holder but also stress free. To plan your insurance, you can take the help of a term insurance premium calculator.

Before you get your hopes up, you need to know that term insurance does not offer maturity benefit. So, if all goes well and you outlive the term of your policy, the company is not liable to pay you any monetary benefit. If you are looking for maturity benefit, you can apply for Aegon Life’s iReturn insurance policy.

II/Oct 2018/4520

Calculate premium for your Term Plan

  • Y N
    • Annual Income
    • Sum Assured
    • Select Cover Upto Age
    • Name
    • Mobile
    • Email ID
Your Annual Premium for Aegon Life iTerm Insurance Plan
“Celebrating – ‘Aegon Toh Tension Gone’”
Term Insurance Plan vs Home Loan
Know What are Direct Taxes and Why are They Called Progressive?