Policybazaar says online cover up to 72% cheaper

They said online home loan insurance can be cheaper over a 20-year loan tenure.

Policybazaar has launched an online home loan insurance product in India, positioning it as a lower-cost and more flexible alternative to traditional offline home loan insurance, which is often bundled with loans.

The company said online home loan insurance can be up to 72% cheaper than offline options over a 20-year loan tenure, mainly due to direct-to-customer pricing and zero goods and services tax (GST). Offline home loan insurance typically attracts 18% GST.

Using a cost illustration for a 30-year-old borrower with a $110,000 (₹1 crore) cover and an interest rate of 8%, Policybazaar said offline home loan insurance would result in a total premium outgo of about $6,578 (₹5.98 lakh) over the policy term.

In comparison, the online option would cost around $1,760 (₹1.6 lakh). 

On a monthly basis, premiums would be about $27.41 (₹2,492) for offline cover versus $8.02 (₹729) for online cover.

Policybazaar said traditional home loan insurance products are often rigid, with limited transparency and flexibility for customers. These products are usually offered offline and bundled with home loans, leaving borrowers with fewer choices and higher long-term costs.

The insurer said its online home loan insurance can be purchased independently of the loan and allows customers to tailor coverage to their loan amount. 

Borrowers can foreclose or adjust their loans without incurring additional insurance costs, and there is an option for claim payouts to be made directly to the family rather than the lender.

($1.00 = ₹90.02)