Mortgage Redemption Insurance (MRI) is a type of Life Insurance. It is a Decreasing Term Life Insurance taken to cover-up a Housing Loan. Whenever you apply for a Housing Loan, You suggested to take a MRI or Mortgage Redemption Insurance against the housing loan. Mortgage Redemption Insurance repays the balance Housing Loan in case of death of the borrower before its repayment.
Some people think that, it’s an extra expense and some think that they will live long and repay the Housing Loan, some people have enough risk cover and think to repay from there in case of death.
In fact, the Mortgage Redemption Insurance protects just the Housing Loan Company, it guarantees that it will pay back entire remaining loan amount as well keep tension free your family after your death during the Housing Loan Tenure.
In case of non Mortgage Redemption Insurance against the Housing Loan, there will be very unlikable situation for the family as bank will recover the balance loan amount from the family or will acquire the property on which the Housing Loan sanctioned , it may be dream home of the family or may be the only home for your family after your death.
Features of the Mortgage Redemption Insurance:
- Lowest Premium charges against the high amount.
- Pure Protection plan with death benefit only.
- Decreasing sum assured as per the decreasing Housing Loan liability over the years.
- Sum Assured directly settled with the unpaid loan amount.
- As it’s a pure protection plan, there is no maturity.
- Double Tax Benefit there, premiums are tax exempted under section 80 C and claim amount is tax free under section 10(10D).
My relative purchased a bungalow in Hyderabad for Rs 3Cr and taken loan of Rs 2 Cr from a bank. At the first attempt for MRI, his family refused to take the insurance against the home loan, but after discussion with adviser he taken MRI without agreed the family, and paid nominal amount around Rs 30,000. After couple of months he died in an road accident, family has no money to repay the loan of Rs 2 Cr to Bank, but due to of the MRI family is in that house now which is only home for them to live.
If we don’t have proper backup against the home loan, we should go for the Mortgage Redemption Insurance as life is unpredictable, no body knows that how long he will live, stay protected for your dependent family, insurance is not for you, it’s for the family behind you.