Insurance Plans India October 7, 2021

Loan protection insurance helps pay off your outstanding loans in the event of your death during the policy term. The insurer shall pay the Equated Monthly Installments (EMIs) on your behalf if you won’t be able to do so even due to unemployment or any other reason. However, that would depend on certain terms and conditions as specified in the policy agreement. You will not only get protection for your loan only but also your health and family. Read this page and learn about the top loan protection insurance plans in India.

List of Popular Loan Protection Insurance Plans

You can compare these plans and see which provides you vast coverage for your loan as per your financial needs.

SBI Life – RiNn Raksha

SBI Life – RiNn Raksha is a group credit plan wherein your financial institution will pay your premium. The plan covers your debt and pays off the same in case of your death. You have an option to increase your cover by 120% of the loan amount at inception. The insurer provides you two options to cover the floating interest rate on your loan –

Gold – The loan outstanding amount calculated to pay on the death of the insured is based on the floating rate offered by the financial institution/bank.

Platinum – The payable amount is based on the floating rate offered by the bank/financial institution, subject to the minimum loan balance as per the fixed interest rate at inception.

During the moratorium period of 3 months to 6 months, loan disbursement will be staggered and the cover amount will remain constant or increase due to change in loan disbursal or interest amount due.

This loan protection plan is available if the group size is a minimum of 20 members. For each member, a minimum sum assured of INR 10,000 is available, whereas there is no maximum limit on loan cover.

HDFC ERGO Ultra Loan Shield

HDFC Life Insurance provides you with a unique insurance plan that will cover your loan in case of a life or health emergency. You can choose your coverage as a health plan or life plan. If you opt for a life plan, you’ll get cover for 2-30 years. And in case of death, the insurance company shall repay the loan on your behalf as per your loan interest rate, balance amount, moratorium period, etc. The insurer also provides you the following optional benefits –

  • Additional Accidental Death Benefit
  • Accelerated Terminal Illness Benefit
  • Accelerated Critical Illness Option 1
  • Accelerated Critical Illness Option 2
  • Accelerated Total Permanent Disability

However, under the health option, you’ll get coverage for accidental death and permanent total disability. You’ll also get the following benefits under the health option.

  • Critical Illness Benefit
  • Permanent Partial Disablement
  • EMI Cover

Note – Both the borrower and co-borrower are covered for 100% of the disbursed loan amount, and upon payment of the benefit, the policy shall terminate for both. The policy term is 1 to 5 years, subject to the loan outstanding balance. 

Max Life Group Credit Life Secure Plan

This group insurance is available where there is a minimum of 50 members in an organization/company. Max Life Insurance provides financial protection to each member against loans in case of death during the policy term. The minimum face amount per member is INR 5,000. You’ll get coverage for both natural and accidental death. You have two options to receive the death payout:

Decreasing Cover Death Option – Your cover is based upon your outstanding loan amount as set at policy inception. If you choose this option, the cover is available during the moratorium period as well if the loan monthly installments begin after a defined period. Your Sum Assured is level till the end of the moratorium period and reduces afterward as per the schedule.

Level Cover Death Option – A minimum sum assured of INR 5,000 per member is ensured at inception and shall be payable in the event of death during the policy period.

There’s also a Co-borrower Cover Option by which the primary and co-borrowers will get separate insurance covers to the extent of the total loan amount. This benefit is available if both co-borrowers meet the eligibility conditions.

Note – No disability cover is provided under this loan protection policy.

ICICI Pru Loan Protect

ICICI Pru Loan Protect is a non-participating term insurance plan that provides coverage for loans. You can choose your cover from the following two options –

Fixed Cover: You need to choose a Sum Assured at the inception of the policy, and it will be paid if you die during the policy term.

Reducing Cover: The insurer shall pay a death benefit equal to the Sum Assured in case of your death during the policy term. This death benefit shall reduce monthly starting from the second policy month.

You can choose a policy term lesser or equal to the loan tenure.

Type of LoanPolicy Term (In Years)
Mortgage loanFor Single Pay - 5, 10, 15, 20, 25, 30 and For 5 Pay - 5-20, 25 and 30
Auto LoanFor both 5 Pay and Single Pay - 5, 10, 15, 20, 25, 30

Note – A single pay is a one-time lump sum premium payment, whereas 5 Pay means the premium payment for 5 years only.

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