Shun expensive insurance policies sold with home loans

You will be much better off buying the required plans directly from life and general insurers

Often, when a person is sanctioned a home loan, banks or housing finance companies also try to sell him home loan insurance (also known as mortgage redemption insurance) or home loan protection plans (HLPPs). 

These plans are for three-five years for individuals and up to five years for group plans. Typically, the premium is 0.8-1 per cent of the sum insured. “This policy pays the sum assured when the policyholder has been diagnosed with any of the 13 critical illnesses covered, accidental death and permanent disability,” says Puneet Sahni, assistant vice-president, product development at SBI General Insurance. Financial planners, however, disagree.