Whalesbook
Policybazaar has officially introduced an online home loan insurance product designed for retail borrowers across India. This move challenges the conventional model where banks typically bundle loan-linked insurance policies with home loans.
Cost Savings
Company data indicates that these new online policies can be up to 72% less expensive than comparable offline policies sold by banks. This significant price difference is attributed to a direct-to-consumer distribution model and the absence of Goods and Services Tax (GST) on online insurance products.
For instance, a 30-year-old borrower seeking a ₹1 crore home loan over 20 years at an 8% interest rate could face a total offline insurance premium of approximately ₹5.98 lakh, inclusive of GST. The equivalent online policy from Policybazaar reduces this total premium to around ₹1.6 lakh over the same period, with notably lower monthly payments.
Product Features
The online home loan insurance can be purchased independently of the home loan itself. This separation allows the coverage amount to dynamically align with the outstanding loan balance. It also offers borrowers greater flexibility, enabling them to foreclose or modify their home loan without incurring additional charges on their insurance policy. Payouts can be made directly to the borrower's family upon claim.
Market Opportunity
Despite these potential savings, awareness of standalone online home loan insurance remains low among borrowers, many of whom still opt for lender-provided covers. Industry observers anticipate that as the retail credit market continues to expand, consumers will increasingly explore and demand standalone insurance options as a viable alternative to bundled offerings.