What is the story about?
Policybazaar has introduced an online home loan insurance product for retail borrowers, offering an alternative to traditional loan-linked insurance policies typically sold by banks alongside home loans.
Home loan insurance is intended to cover outstanding loan amounts in the event of a borrower’s death. In India, such covers are commonly offered offline and bundled with home loans at the time of disbursal. These policies are generally characterised by fixed premium structures, limited portability, and higher overall costs.
According to company data, online home loan insurance products can be up to 72% cheaper than comparable offline policies offered through banks. The difference in pricing is attributed to the direct-to-consumer distribution model and the absence of Goods and Services Tax (GST) on online policies.
For instance, for a 30-year-old borrower with a ₹1 crore home loan at an interest rate of 8% over a 20-year tenure, the total premium payable under an offline home loan insurance policy can be around ₹5.98 lakh, including GST. A comparable online policy results in a total premium of approximately ₹1.6 lakh over the same period, with lower monthly payments.
The online product can be purchased independently of the home loan and allows policy coverage to align with the outstanding loan amount. It also provides flexibility to foreclose or modify the loan without additional insurance-related charges. In addition, the policy structure allows claim payouts to be made directly to the borrower’s family.
Despite the availability of such products, awareness of online home loan insurance remains limited, with many borrowers continuing to rely on lender-linked covers. Industry participants note that as retail credit expands, borrowers may increasingly evaluate standalone insurance options alongside bundled offerings.
Home loan insurance is intended to cover outstanding loan amounts in the event of a borrower’s death. In India, such covers are commonly offered offline and bundled with home loans at the time of disbursal. These policies are generally characterised by fixed premium structures, limited portability, and higher overall costs.
According to company data, online home loan insurance products can be up to 72% cheaper than comparable offline policies offered through banks. The difference in pricing is attributed to the direct-to-consumer distribution model and the absence of Goods and Services Tax (GST) on online policies.
For instance, for a 30-year-old borrower with a ₹1 crore home loan at an interest rate of 8% over a 20-year tenure, the total premium payable under an offline home loan insurance policy can be around ₹5.98 lakh, including GST. A comparable online policy results in a total premium of approximately ₹1.6 lakh over the same period, with lower monthly payments.
The online product can be purchased independently of the home loan and allows policy coverage to align with the outstanding loan amount. It also provides flexibility to foreclose or modify the loan without additional insurance-related charges. In addition, the policy structure allows claim payouts to be made directly to the borrower’s family.
Despite the availability of such products, awareness of online home loan insurance remains limited, with many borrowers continuing to rely on lender-linked covers. Industry participants note that as retail credit expands, borrowers may increasingly evaluate standalone insurance options alongside bundled offerings.
