Mortgage Redemption Insurance
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Mortgage redemption insurance plays an important role in the mortgage industry. Buying a property is perhaps the single biggest investment made by a person during his lifetime. You may have planned well for paying your EMI. But what happens in case of your accidental death or disability. Will your family can bear the emotional and financial challenges. Mortgage redemption insurance is a type of insurance that insures the lender in case the buyer defaults on the loan.
Mortgage redemption Insurance in India
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One of the flagship products in the redemption Insurance field is the Mortgage Redemption Assurance policy (without profits) plan by LIC. The Mortgage Redemption Assurance policy (without profits) plan is designed to meet the requirements of the policy holding individual who seeks to ensure that all his outstanding loans and debts are automatically paid up in the event of his demise.
This policy is suitable for middle-aged to elderly professionals whose dependents might need assistance in clearing their debts in case of their unexpected demise. Mortgage redemption insurance assures up to Rs 10,00,000 where policy holding individual can pay their premium by Yearly, Half-yearly, Quarterly, Monthly, Salary Saving Scheme.
Mortgage redemption insurance or Mortgage Insurance is essential to protect the future of his/her family assistance in clearing the debts in case of their unexpected demise. The insurance cover reduces every year in line with the loan redemption and finally becomes zero on closure of the loan.
The Mortgage Redemption Assurance policy (without profits) plan is designed to meet the requirements of the policy holding individual who seeks to ensure that all his outstanding loans and debts are automatically paid up in the event of his demise. However, the policies are subject to a condition that the insurance cover would not extend beyond 65 years. All loans must be liquidated by the time the borrower attains the age of 65.
Tax Benefits on Mortgage redemption Insurance
- Under Section 80 C premiums up to Rs. 100,000 are allowed as deduction from taxable income.
- Maturity and Death Benefits are tax free under section 10 (10) D of the Income Tax Act, 1961.
Key Benefits of Mortgage Redemption Insurance
- Mortgage redemption insurance is a type of insurance that insures the lender in case the buyer defaults on the loan.
- All outstanding loans declared at the beginning of the financial year would be payable as per the prepared schedule in case of accidental death or disability. However, there is no survival benefit for Mortgage redemption Insurance.
- The insurance cover reduces every year in line with the loan redemption and finally becomes zero on closure of the loan.
- Deduction from taxable income allowed on Mortgage redemption insurance.
- Buying a property is single biggest investment made by a person during his lifetime. Mortgage redemption insurance protects the future of his/her family.
- You have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less.
