Complete Comparison Of HLPP And Term Insurance

Farhan is a young father of two kids. One evening, he sat at his kitchen table and was watching YouTube videos. In one of the videos, he saw a renowned influencer talk about the need to buy a life insurance policy. He suddenly remembered that recently even a friend mentioned about this, and Farhan was curious. As he sipped his tea, he felt overwhelmed by insurance options.

Imagine you are in Farhan's shoes. You want to make sure your family is protected, but the choices seem confusing. Is term insurance the same as life insurance or something different? HLPP (Home Loan Protection Plan) sounds intriguing, but what does it actually mean?

Which one offers better benefits when you want to make sure your family is secure if anything happens to you?

We will help you decide just that! Let’s dive into the complete comparison of HLPP and term insurance, so that, like Farhan, even you can make an informed decision.

What Is Home Loan Insurance?

When you buy your dream house, you see that everything is perfect, right? From a small bulb to the most modular kitchen, you want it to be astounding. When you invest in your home through a loan, you can add a special protection called the HLPP to it.

Home Loan Insurance, or Home Loan Protection Plan (HLPP), is like a safety net for your home loan. With HLPP, your outstanding loan amount gets covered, sparing your family from the stress of repaying it, in case of unforeseen events.

Banks and financial institutions usually offer these plans. Often, they bundle it with your home loan, making it a mandatory part of the deal. This insurance covers you until you have fully repaid the loan, aligning the policy term with your loan tenure. As you repay your loan, the sum assured by your HLPP gradually decreases. If you pass away before clearing the loan, this insurance steps in and settles the remaining amount.

Isn't it reassuring to know that even in the worst-case scenario, your family won’t have to worry about the home loan?

For example,
Hitesh comes from a well settled family and is now in a job that pays him well. He decides to build a beautiful home for himself and secures a loan for it. He calculates the monthly EMIs that he has to pay and his banker suggests that he pair a HLPP along with it. This way, if something unfortunate happens, his family will be financially safe from repaying the loan amount.

Now, it is time to understand a term insurance plan.

What Is A Term Insurance Plan?

What if you want to ensure your family’s financial security no matter what happens? Term insurance is a type of life insurance plan designed to do just that. If you pass away during the term of the policy, your family receives a predetermined sum of money. Your loved ones can use this money to maintain their current lifestyle, cover their financial needs, and even pursue their dreams without any added stress. Think of term insurance as the simplest and most affordable way to safeguard your family's financial future. This is a pure-risk policy. It means that there is no savings or investment component. If you bite the dust during the policy term, your family gets the payout. And, if you outlive the policy term, the cover ends, and you don't receive any money back.

For example,

Hira has recently found her dream job. She is very responsible and takes care of her aged parents and younger siblings. She proactively thinks about their future and wonders how her family will cope if something happens to her. She immediately buys a term insurance plan that will provide her family with a lump sum amount if she passes away. This ensures that her family will be financially stable, no matter what.

Difference Between HLPP And Term Insurance

Let’s compare a HLPP with a term insurance plan -

To Sum It All Up,

In summary, HLPP and term insurance serve different purposes. HLPP protects your home loan by covering the outstanding amount if you pass away. Term insurance provides a broader financial safety net for your family, helping with various expenses. HLPP is comparatively costlier and decreases in coverage over time, while a standard term insurance policy is cheaper and keeps the same coverage amount. Hence, choose the plan based on your specific needs and what best secures your family’s future.