A house to live is a basic necessity for every person. Banks and other financial institutions offer home loans to people who meet the required eligibility criteria. It helps those people who can not afford to pay the full price of a house.
To avail of the facility of a home loan you need to have certain qualifications. The eligibility criteria are related to a person's age, income, past repayment history and the cost of the property. It also considers the person's work experience, number of dependents, spouse's income, stability of income and employment, assets, liabilities, etc. Banks normally lend up to 3-4 times the annual gross income as a home loan. Every bank has its own set of eligibility criteria that may differ slightly.
Banks need certain documents at the time of applying for a home loan. The types of documents may vary, though normally those include proof of age, proof of identity, proof of residence, salary slip of last three months along with salary certificate, proof of continuity in job for last two years or Form 16, bank statement for last six months, proof of business address in respect of businessmen, etc.
Due to the booming Indian economy, there is a lot of competition among banks to offer various kinds of retail loans to people. The banks keep cutting interest rates and keep offering attractive terms and conditions to lure customers towards the banks. Owning a home of own is a dream, which is easier to realize now.
People go for various life insurance policies due to their many benefits. The amount of life insurance depends on many factors. Ideally the sum assured should provide for all the needs of your family like children's education and marriage while meeting the daily basic expenses when the insured person is no more. It may not be an easy decision to make. First of all, your income level has to permit you to opt for the policy that you want to take. Your need may be more than the disposable income you can spare for paying premiums. Even if you want a higher sum assured the insurer need not oblige you citing your income.
There are many factors that influence the kind of insurance amount a person needs. One way of doing it is to calculate the level of income a family needs to maintain its standard of living when the breadwinner is not around. For example if a family's present need is Rs 20,000 p.m., then the extent of life insurance for its earning members should be such that interest income from the sum assured can meet the family's monthly expenses of Rs 20,000.
Age is also a big factor in deciding for insurance amount. Young people with no dependents may not have much need for life insurance. As one's family responsibility grows, there is need for life insurance. When one is single he may not bother much about life insurance. However, at middle age a person having children will feel the need to have a bigger amount of life insurance as the need to give good education to children and marriage expenses will dog him. Thus, a periodic review based on your family circumstances is required in order to ensure that the coverage is adequate. A person employed in some hazardous profession will need more life insurance cover than an ordinary individual.
In fact, the amount of insurance one should buy is dependent on his/her economic value, which is also called human life value. It can vary depending on individuals.
Life insurance provides a family with financial support in the case of death of the breadwinner of the family. According to a life insurance policy, a fixed amount of money is paid to the insured or the beneficiary at the end of its term or upon the death of the insured. Life insurance also offers investment benefits. With an insurance policy, you can save for your old age, fund your child's education, save taxes and so on.
Besides other saving benefits a life insurance policy can be linked to a person's pension plan. A person can make contributions to a pension scheme, funded by a life insurance company. A policy can provide security for your family, protect your home mortgage, take care of your estate planning needs and look at other retirement savings/income vehicles.
Besides serving as a protective cover, life insurance acts as a good money-saving scheme, which enables one to accumulate wealth to acquire assets, get children educated and retire comfortably. Most life insurance policies also provide tax benefits under various sections of the Indian Income Tax Act. Insurance policy holders pay a monthly, quarterly or annual premium to insurance companies. When individuals die or when the policy has reached maturity, a pre-determined amount is paid to the policy holder or the dependents as nominated by them.
It is a wise decision to go for a life insurance policy. Lack of sufficient life insurance coverage when a loved one dies can have devastating consequences for a family. The loss of income following the breadwinner's death will cause the family immediate economic hardship and make it harder for them to realize future goals like paying for children's education. Whether you are married or not you may need life insurance to protect your partner or surviving family members. Unless you already have sufficient financial resources, your survivors will need insurance cover. A life insurance policy can be the basis of protection and financial stability after one's death. There can never be adequate compensation for the loss of a dear one. But, if the family is also left without sufficient money to meet basic needs, they will suffer more.
Insurance companies collect premiums from a large number of people. Only a few of these insured people may actually suffer the loss. Thus insurance companies invest the money they collect and end up making money.