It is not just a high value asset that you are investing in. It is what you will call HOME for years to come. You will design and decorate it as per your liking. You will make it come alive with moments of love, happiness, bliss, celebration; and anger, arguments and fights; followed by apologies, hugs and promises. These memories will resonate for years to come. The essence, heart and spirit of the family is what makes a brick structure a home; and creates the warmth, security and comfort that we all wish to come back to at the end of the day. This is the reason that buying a house is a lifetime wish which everybody harbours.
So, after months of searching, you have finally found a house that you want to translate into home. You apply for a home loan, it gets sanctioned, and you get the keys to the house. You unlock the door, enter your would-be abode; and start thinking about the décor. WAIT!! You have missed something!!
Technically you do not own the house at present. You have a 20-year home loan which needs to be paid diligently over the years. Of course, you have accounted for that. Your current income is enough for you to pay the loan as well as manage other household needs; and it is only going to grow over the years. And there is an auto-debit facility, so you don’t have to worry about missing any installment.
But only if life was predictable and smooth… We hate to say this, but what if God forbid, something was to happen to you? The income would stop and so would the installments… and if the family becomes unable to afford both household expenses and home loan installments, they would have to let go of their home. Hence, the necessity to have a Home Loan Protection Plan (HLPP) when taking a home loan. HLPP is simply an insurance plan under which the insurance company pays off the balance amount of your home loan to the bank, NBFC or housing finance company in case of death of the borrower. The most common and preferred HLPP in the market is a Mortgage Reducing Term Assurance or MRTA plan.
What is MRTA?
Mortgage Reducing Term Assurance is similar to a term life insurance plan, that is, it pays the assured amount only in case of the death of the insured person. There is no maturity benefit under this plan. This explains the ‘Term Assurance’ part of the name. Your home loan or mortgage keeps reducing over the years as you keep paying regular installments. The sum assured under the MRTA plan, follows the loan schedule and reduces over time as the outstanding loan amount reduces. Hence the term ‘Mortgage Reducing’.
Key benefits of MRTA:
- MRTA plans are insurance products specifically designed to cover home loans and hence are structured with analogous features and benefits.
- Banks or housing finance companies that fund home loans, usually have a tie-up with select insurance companies to offer MRTA plans to their home loan customers. This tie-up not only ensures that you get a better premium rate, but also the process and documentation involved in acquiring insurance becomes quick and easy.
- The benefit schedule of a MRTA plan follows the loan schedule i.e. the sum assured reduces over time as the loan liability reduces. Hence, the premium for this plan is lower than other home loan protection plans.
- MRTA plans offer the option to pay a single premium at plan inception or pay regular premiums which can be bundled with home loan installments.
- MRTA plans offer joint life cover for co-borrowers of the plan. If the loan is in a joint name with one’s spouse, parent, child, sibling, or any partner with insurable interest, both lives can be covered under a single plan.
- In case of your unfortunate death, that triggers the home loan insurance, your lender settles the loan amount with the insurance company, and the excess amount, if any, is paid to the beneficiary. There is minimum involvement required on the part of the beneficiary during this entire process.
In addition to the above listed benefits, different plans offered by different insurance companies, provide additional features and advantages like premium discount, moratorium period cover etc.
We cherish and take care of everything we own because these are things that we have bought with our hard-earned money. Then how can one have a casual attitude about the house that has been a long-cherished dream; and which has come true after years of planning and savings. While not every precious thing in life can be insured, the ones that can be, should be. Insure your home loan insurance with MRTA and live #FutureFearless.
