BUNDLED HOME LOAN INSURANCE

Single premium covers can't be ported if you switch lenders

- HIMALI PATEL

The National Housing Bank (NHB) has directed housing finance companies (HFCs) to address concerns about the mis-selling of insurance products bundled with home loans. According to media reports, HFCs must now obtain clear and separate consent from borrowers before selling them insurance products and offer at least two policy options.

Buying insurance with a home loan is not compulsory. "Borrowers are not obliged to buy insurance from their lender," says Gaurav Mohta, chief marketing officer, Home First Finance Company.

The lender also cannot make the purchase of an insurance product a precondition for approving the loan. "The Insurance Regulatory and Development Authority of India (Irdai) prohibits forced bundling of insurance with loans," says Adhil Shetty, chief executive officer, BankBazaar.com.