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I  was sanctioned  a home loan from a nationalized bank recently.  However, the sanction letter states that it is mandatory for me to take property insurance. Has the Reserve Bank of India (RBI) specified any rules making   property insurance mandatory? 

 

— Name withheld on request

 

RBI or the insurance regulator do not mandate that you buy insurance for the purpose of availing of a loan. Further, banks cannot force you to buy insurance from their recommended insurers only. However, it is a general practice for banks to ask for property and life insurance when extending a home loan. This is essential to protect their financial interest in the mortgaged property and the life of the borrower. Several banks provide an exemption to buying insurance subject to charging a higher rate of interest. This is to compensate for the risk of loss that they would bear in case the house gets damaged or the borrower dies.

However, I would recommend you to buy the property insurance, as it is in your financial interest. Home insurance is inexpensive and would compensate you in case your property gets damaged due to fire or natural catastrophes. You can however choose to buy this insurance from a company of your choice, and not necessarily buy it from the bank. The cost of home insurance is around 3,500 for a house that costs 1 crore to construct.

 

My wife is 50 & I am 60. We have two health insurance policies. Mediclaim (base) from New India Insurance for more than 10 years and top-up from HDFC for more than five years. Should i shift my mediclaim policy to any other insurance company to avail of cashless facility. 

                    — Anand Mahajani

 

There should be a strong reason when you consider porting your health insurance from one insurer to another. All insurers provide cashless facility. However, the network of hospitals do vary by insurer. In case your preferred hospitals are not in the network of your insurer, then you can consider porting your plan. Another reason to evaluate porting would be restrictions in your current plan. These restrictions would include room rent capping, co-pay or disease-wise restrictions. In case there are such restrictions in your plan, you can port to a plan that allows you to make full claim in the policy.

There is limited downside in porting, except the administrative hassle. Some insurers may insist on a medical check-up before agreeing to port your plan. Further, you should ensure that in the new plan, no additional waiting periods have been introduced. Some insurers would allow porting of the entire sum assured i.e, the base sum assured and the cumulative bonus.

Abhishek Bondia is principal officer and managing director, SecureNow.in.

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