When a person borrows a home loan, it becomes necessary to repay it. However, if the person passes away before the repayment, then it might become difficult for his/her family members to repay the loan and they might lose the house. Hence, buying life insurance is necessary to protect family members from such a financial liability.
In this article, we will discuss why people should buy life insurance if they have a home loan.
Most people borrow a home loan to purchase their house. Hence, they have a financial liability that needs to be repaid. It can be become very difficult for the family members to repay this loan if the person who has taken the loan passes away before the repayment. However, by purchasing a life insurance, the person can protect his/her family from such a financial burden.
When a person purchases life insurance, his/her nominee can receive a sum assured. If the policyholder dies during the tenure of the policy, then his/her nominee can be provided with the sum assured. This sum assured can be used to pay the home loan. Hence, a life insurance plan can offer financial protection to the policyholder’s family.
Here are the benefits of purchasing a life insurance policy-
It Can Provide Financial Protection
Life insurance can provide financial protection to the policyholder’s family in case he/she passes away during the tenure. Hence, when a person starts to plan for the future, it’s important to make sure he/she purchases life insurance. A life insurance policy can give the insured person’s family a financial foundation to fall back on if there’s an unfortunate event. Hence, it can provide financial security. The sum assured received can be used to pay regular and future expenses. It can also be used to repay the home loan amount.
It Can Provide Good Returns
While life insurance can provide a sum assured, it also provides returns based on the money invested by the policyholders. There are various life insurance policies that offer good returns. Hence, by purchasing a life insurance policy, a person can provide financial security to his/her family as well as earn returns. Therefore, during the policy tenure, a policyholder can build a corpus. Hence, it is wise to purchase life insurance.
It Offers Tax Benefits
Apart from providing a sum assured in case of the policyholder’s death and maturity benefits, life insurance also offers tax benefits. The policyholder is allowed to claim a tax deduction under Section 80C for the premium paid to purchase the plan.
It Can Replace Income
There are life insurance policies that offer assured income benefit. Such policies provide income at regular intervals. This income can be used to pay regular expenses.
Life Insurance Policy to Secure Family
As every person wants to provide financial security to his/her family, life insurance policy becomes important. It can replace income, provide a sum assured, and offer returns. Hence, the policyholder’s family can pay off a huge financial liability like a home loan.