POLICY COVER

Most home loan insurance plans provide a reducing cover. That is, the cover size is linked to your outstanding loan amount and the sum assured reduces along with the liability as one repays the loan.

In contrast, term plans have a fixed benefit. The nominee gets the full amount, no matter at which point of the policy tenure the claim is made. This money is used to pay off the bank debt and the balance can go to the borrower's family.

A few loan plans also give a constant cover but are typically costlier than standard loan insurance plans. In fact, if we do a comparison, home insurance covers are costlier than term plans in general.

Also, term plans are life insurance products and are easier to compare as all of them provide the same death benefit. Premium, riders and sum insured options are the standard factors for evaluation.

On the other hand, mortgage redemption covers are offered by both life and general insurers and the products sold vary.

While the ones sold by life insurance companies are long-term covers, general insurance companies provide policies that have to be renewed annually. There is also a difference in how they package these products.

For instance, Home Assure, the home loan insurance cover offered by ICICI Prudential Life insurance, is a simple 'no-frills' policy that promises to pay the outstanding loan if the policyholder dies.

In comparison, the Home Safe Plus plan from ICICI Lombard General, has additional features such as disability protection, cover for the home and contents and an add-on critical illness cover. It is also, therefore, costlier.