Mortgage Protection Insurance

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The mortgage protection insurance is a special type of insurance policy and is gaining huge popularity in the Indian mortgage industry. The mortgage protection insurance is a special type of insurance policy that guarantees repayment of a mortgage loan in the event of death or disability of the person who borrowed the mortgage.

The tenure of payment of such mortgage protection insurance is usually of 12 months from the date of first default of payment of installment. In some cases the tenure of payment support goes higher up and it solely depends upon the mortgage insurance provider who covers the mortgage. This type of Indian mortgage protection insurance covers the risk of the lender. The lender's loaned capital is also protected through these special type of insurance instrument. The insurance protection on mortgage in India is gaining steady popularity amongst Indian masses.

This type of specialized mortgage protection insurance products are of two types, viz :

  • Private Mortgage Insurance
  • Mortgage Insurance Premium
Private Mortgage Insurance – are mortgage life insurance products that protects the borrower from the lender in the event of default which generally, covers a substantial portion of the capital borrowed. They are insurance products of private insurance companies.

Mortgage Insurance Premium - are mortgage life insurance products that also protects the lender in the event of non-payment due to some unfortunate event. These life insurance products are generally government insurance products.

The following types of rates are prevalent in the Indian mortgage insurance market -

Fixed Mortgage Rate – in this case the rate of interest remains fixed throughout the loan term. The mortgage rates does not varies according to market conditions. In other words, the rate of interest is pre-fixed during the process of borrowing and it generally varies between between 12.5 % to 25 %.

Flexible Mortgage Rate - is one in which the interest rate varies according to market movements. This type of interest rate is called 'adjusting' or 'floating' rates. The risk factor is high in this type of interest rates.

Some of the well known mortgage financing companies operating in India are as follows -

  • LIC Housing Finance
  • HDFC
  • ICICI Home Finance
  • SBI Housing Finance
  • UCO Bank
  • Allahabad Bank
  • United Bank of India
  • Kotak Mahindra Bank
  • Citi Bank
  • Standard Bank
  • HSBC

Some of the prominent Indian insurance companies offering risk coverage on mortgage are as follows -

  • Bajaj Allianz Life Insurance Company Limited
  • Birla Sun Life Insurance Co Ltd
  • HDFC Standard Life Insurance Co Ltd
  • ICICI Prudential Life Insurance Co Ltd.
  • ING Vysya Life Insurance Company Ltd
  • Life Insurance Corporation of India
  • Max New York Life Insurance Co Ltd
  • Met Life India Insurance Company Pvt Ltd
  • Kotak Mahindra Old Mutual Life Insurance Limited
  • SBI Life Insurance Co Ltd
  • Tata AIG Life Insurance Company Limited
  • Reliance Life Insurance Company Limited
  • Aviva Life Insurance Co. India Pvt Ltd
  • Sahara India Life Insurance Co Ltd
  • Shriram Life Insurance Co Ltd
  • Bharti AXA Life Insurance Company Ltd
The Indian mortgage industry is dominated by housing finance companies like LIC Housing Finance, HDFC, ICICI Home Finance etc. They are the main provider of mortgage protection insurance products in India. This is one of the most popular type of mortgage loan that is prevalent in India. The government of India, Life Insurance Corporation of India enjoys complete market leadership in this sector. The estimated size of the organized mortgage industry in India account only for 25% of the total housing investment in India. Private institutions like, commercial banks both National and Foreign Banks along with Cooperative banks and other non-banking financial companies are also registering decent growth. The Indian mortgage loan industry is consistently registering 20-50 % growth on year-on-year basis, from the year 2000 onwards and the trend looks rosy in near future.

Last Updated on 5/26/2011