So now we know from this blog, that we take life insurance to protect our human capital (if you don’t know what this is, read up here). Firstly, one of our major financial capital is the house we build. How do you protect that?
What protection does a physical construction like a house need? Well, what happens if there is an earth quake, fire accident and the house is damaged? This will result in catastrophic damages to your total capital. Now that we all agree there is a need to protect our house, how do we go about doing this?
Moreover, just like I take Life insurance to protect my family from them losing my earnings – I have to take something called “House Insurance”. You can choose and add a variety of riders for your House insurance depending on your needs and risk aversion. There is a rider to cover your “Home Contents” in the insurance if you need.
Pitfalls – Several housing loan corporations, sell “Home Loan Insurance” and the cost is passed on to the customer. This is to protect their interest (yes, does benefit the family if something happens to me) but it is more to protect the Corporation by itself. And HOME LOAN INSURANCE IS NOT THE SAME AS HOUSE INSURANCE. Home loan insurance does not cover or protect any damages to the house.
Tricks – 1) Keep the insurance copy with a trusted family member/friend who lives preferably in a different city
2) Negotiate on Home Loan insurance and really think if you need a home loan insurance (which can be covered via a cheaper increased term insurance)
Top site ,.. amazaing post ! Just keep the work on !