I took a loan recently to construct a house. Which policy should I take to cover the home loan liability?
Sujit Nair, Kochi
You can go for a term insurance plan or a mortgage redemption plan to cover the loan liability of your house. While the cover will remain constant in the term plan, the mortgage redemption plan will cover the liability that remains outstanding if the borrower dies before clearing the loan. The extent of cover or the sum insured in this plan equals the outstanding loan amount and reduces as the loan is repaid. The premium can be paid in this plan in a lump sum or periodically. Insurers offer discounts if the payment is in a lump sum.
