Insurance sold alongside a home loan is often framed as part of the process rather than a genuine choice, and sometimes financed into the loan principal, where you pay interest on it for decades.
It's common for a home loan sanction to arrive with an insurance policy attached, often a single-premium policy, and often financed straight into the loan principal rather than paid separately. Framed at the sanction stage as simply part of the paperwork, it's easy to sign off on without registering that it was ever a choice at all.
Insurance sold alongside a loan generates a commission for whoever sells it, and bundling it in at sanction stage, when a borrower is focused on getting the loan closed rather than scrutinising every line of the KFS, makes it far more likely to go through unquestioned than if it were offered as a separate, optional purchase.
Insurance sold with a loan is meant to be the borrower's choice, not a condition of approval. Before you sign anything, it's worth asking directly: is this insurance mandatory for the loan to be sanctioned; can I decline it or buy an equivalent policy independently, potentially at a lower premium; and exactly how is it being paid: deducted upfront, or added to the loan principal and repaid with interest over the full tenure.
A single-premium policy added to your loan principal doesn't just cost you the premium. It costs you the premium plus interest on that premium for however long is left on your tenure. On a 20-year home loan, a premium added in year one can end up costing meaningfully more than its sticker price by the time it's actually repaid. Run the numbers on our EMI calculator with and without the add-on to see the difference for your own loan amount and tenure.
We'd rather you leave a meeting with fewer questions than you brought in, not more of them. If you're currently being offered a home loan with insurance attached and want a second opinion on whether it's structured fairly, book a call and we'll go through the sanction letter with you, line by line.
A 10-minute call with our team usually clears it up faster than an email chain.