Do Single premium mortgage insurance is good for you ?

When ever any client goes to take a loan from any financial institutes, most of these institutes are having a tie-up with some insurer to sale their products so when client is either forced or suggested a insurance. one of such insurance is single premium  mortgage insurance, Where the client is asked to pay single premium for the full tenure.


Do this type of insurance is good for client ? 
You will really surprise like me to hear this real story of one of my client , he actually planned to go for loan of Rs. 2 Cr. from one of the leading private bank where the bank executive proposed him a one time mortgage insurance to protect the loan. 
This loan was for 10 yeas and the age of client is 46 years, the proposed plan was asking for a single premium of 10,00,000/-.


How this single premium mortgage insurance work ?
This is a life insurance and it will cover your balance loan amount at any point of time during the loan tenure, so it means as you keep on paying EMI's for loan the balance loan amount will go down as the insurance cover as well.and this policy automatically ends on settlement of the loan.


My experience :  
When my client come to me with this proposal given by the ban;s executive, i just worked out the premium of 2 Cr. term plan for 10 years if my client go for online policy. 
The result was very surprising the Premium required by him to buy a term plan of 2 Cr. is just 52000/- per year, Where this is not at all linked with his loan balance and will have same cover through out the term of 10 years.
And the insurer was same from the bank as well as what we have calculated premium for.
Then i suggested my client to go for online insurance.


So keep your eyes open this can save your money.


Share your thoughts.


About the author : Ashish Ramesh Bhave is a CERTIFIED FINANCIAL PLANNER, focused and specialized in financial planing for individuals and families. Can be reached at arbfinancials@gmail.com or Cell : 08793107044