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Update Date : 03-Jan-2023

Created Date : 03-Jan-2023

Category : Home Loan E-Book (Promotional_BT)

This is how you can protect your family from losing the house

You’ve done a great job by buying your family a house. But are you doing enough to protect them against the risk of losing it if something untoward happens to you and they are unable to service the loan EMIs?

It is imperative to know that when you are burdened with liabilities and have dependants at the same time then relying solely upon life insurance does not help enough.

Insurance first of all only covers you against a limited set of risks like death, disability, job loss and so on.

Moreover, its claim settlement is a very cumbersome and time-consuming process as it is subject to rigorous investigation and numerous conditions, especially in the case of big ticket claims like death claims where the settlement amount runs into lacs or crores.

Such investigations, at times also run into complications and disputes due to which the claim settlement process can either get delayed or in the worst cases, can even get rejected.

Also, the risk gets concentrated and relying solely upon a stand-alone option in such testing times can prove fatal especially if you have not created any backup plan for your family to fall back on.

So, what is the recourse and what can you do to ensure that your family, during such eventualities remains protected at all times?

For any reason, if your lender doesn’t receive your loan EMIs on time, they will send you a few reminders and finally serve you an eviction notice once the pre-defined notice period expires.

In such cases, they will simply ask you or your family to either clear the pending dues or vacate the property.

Hence, as a preventive measure, it is always recommended to create a strong backup plan in case, the insurance i.e. your primary plan fails.

Here, for the benefit of you and your family, we have listed down a few ways that can help you create a strong protective shield around your family that can stand strong in protecting them from the risk of losing the house.

1. Needless to say, buy sufficient life insurance that along with replacing your income should also accommodate all your liabilities.

2. Create contingency funds/reserves in such a way that they can be liquidated at a click of a button. Until then, it should keep earning you decent returns and grow steadily.

3. Use a “Loan Overdraft Account” to park excess funds that are meant for prepayments. You can use them later for servicing your loan EMIs if need be.

4. Keep your borrowing habits under control. Avoid getting carried away by emotions and enhancing your loan limits for investing in a business or speculative activities that you or your family do not understand.

5. Be a responsible buyer. While buying a property, avoid skipping a stringent due diligence process just because it is taking time. The intention here is to only find out gaps and irregularities and to stop you from buying a legally unfit property. This will only help you and your family in disposing off the property easily if need be.

6. Keep your EMI restricted to the bare minimum level. Instead, use those funds for building assets. If the financial crisis strikes, the lower obligation will be easier to manage.