SBI Loan Insurance Policy
Loans are taken for fulfilling the greatest life goals such as buying a large area of land, a car, buying assets like a house, for hosting weddings, funding a child's education, starting a business etc. But what if the loan payer comes across unfortunate conditions due to which he/she is unable to pay the loan? Suppose the loan payer dies before the loan payment or is no longer able to earn due disablement from an unfortunate accident. In addition to the emotional loss, the family will also suffer from financial losses due to the non-payment of the outstanding loans. In such cases, having a loan insurance policy will significantly help the family of the loan payer. One such policy is offered by SBI, known as the SBI General Loan Insurance plan.
What is SBI Loan Insurance Policy?
SBI Loan Insurance Policy is an insurance plan that offers protection against loans taken. As mentioned earlier, this policy pays the remaining loan EMI's if the policyholder dies before full repayment of the loan amount. The plan also covers if the person insured meets with an accident and is rendered in a condition in which he/she is unable to earn due to their disability. There are special waivers available for the policyholders for some loans.
This SBI general insurance policy covers all outstanding dues on the policyholder's death or disability. Further, this plan also covers for up to 13 major illnesses, treatments, loss of a job, permanent disability apart from death due to an accident.
Features of the SBI Loan Insurance Policy
The features of the SBI Loan Insurance Policy are:
- The plan provides a customizable, comprehensive benefit available to policyholders covering one's debts when the person insured dies or is rendered disabled.
- This plan also provides payouts on the detection of critical illness. It either provides sum insured or pays an outstanding loan amount.
- In case of accidental disability (loss of both eyes, loss of limbs) or death, the plan either pays the loan amount or sums insured.
- There are various options available to the policyholder for increasing their coverage during the inception of the policy.
- The policyholder can choose a fixed amount that can be less than or equal to the total outstanding loan amount while taking the insurance cover.
- There is flexible policy tenure for the payment of premiums. The policyholder can either choose to pay the premium in a single premium or pay for premiums every 5 or 10 years.
- On the loss of a job, the policyholder gets the payouts (sum insured) in a maximum of 3 EMIs.
- Financial institutions can fund the loan amount by including the premium in the loan amount.
- The plan has a moratorium period ranging from 3 months to 72 months, which is six years. The policyholder can stagger disbursements during this period. According to policy terms, the loan cover amount can either increase or remain fixed.
- This plan provides maximum coverage in comparison to other loan insurance plans.
Benefits Offered Under SBI Loan Insurance Policy
The benefits of the SBI Loan Insurance Policy are:
- Loan Security: One of the biggest concerns faced by loan borrowers is the security of loan repayments. An unfortunate occurrence like the death or an accident of the primary borrower could lead to the co-borrower or guarantor being unable to repay the remaining loan amount on time. The SBI loan insurance plan pays the outstanding loan amount, thus ensuring that the policyholders' assets are not affected in any way.
- Timely Loan Payment: The SBI Loan insurance plan is dependable as it repays the remaining loan amount in an organized manner. Thus, it ensures payment of the outstanding loan amount within a particular time frame so that the policyholder's family doesn't face any late EMI charges.
- Disability Benefits: If the policyholder opts for SBI loan insurance, the person insured will also be covered up to a maximum of the total remaining loan amount.
- Free-look Period: The policy has a free look period of 15 days from the day of receipt of the policy. If the insured is not happy with the policy terms, he/she can return the policy at no extra cost. All the premiums paid will be reimbursed to the insured.
- The policy is available for a period of 3 years.
- No medical check-ups are required for a sum insured upto Rs 1 crore and for policyholders' age upto 45 years.
- The loan insurance plan is very affordable as compared to other loan insurance policies.
- Tax Benefits: Premium paid by the insured persons are eligible for tax benefits under Section 80C and Section 10(10D) of the Income Tax Act, 1961.
Inclusions of SBI Loan Insurance Policy
The inclusions of the SBI Loan Insurance Policy are:
- Death Benefit Option: On the unfortunate death of the policyholder, the insurer will pay the remaining loan amount at the time of death of the policyholder. The amount paid will be according to the amortization schedule on the interest rate pre-decided during the buying of the plan.
- Job loss: On the event of loss of job due to a critical illness or diability, the insurer pays the sum insured.
- Disability or critical illness Detection Cover: On disability or detection of 13 critical illnesses, the policy pays the sum insured or outstanding loan amount as per the option chosen.
- If the policyholder's death occurs in between a given month, the death cover included will be the remaining loan amount at the starting of the particular month.
- The critical illnesses covered are:
- Aorta Graft Surgery
- Coronary graft surgery
- Heart Valve surgery
- Kidney failure
- Myocardial infarction
- Multiple Sclerosis
- Major organ transplant
- Primary Pulmonary Arterial
- Total blindness
SBI Loan Insurance Policy: Exclusions
The exclusion of SBI Loan Insurance Policy is:
- In this policy, suicide exclusion is applied. If the policyholder commits suicide in the first year of the insurance cover, the death benefit will not be paid.
- For detection of critical illness in the first 90 days from the date of commencement of the policy are not covered.
- Personal accident -
- Death or disability due to any pre-existing illness
- Payouts claimed for more than one options
- Venereal diseases
- Loss of job -
- Suspension from a job for cheating, poor performance, or unprofessional behavior
- The person is self-employed
- Loss of job due to termination, retirement, or resignation
- Job loss within 90 days from the date of commencement of the policy.
- Other exclusions - Pre-existing illness, AIDs, HIV, psychiatric disorder, self-medication, death due to war, nuclear war, drugs, etc.
Eligibility of SBI Loan Insurance Policy
The eligibility of SBI Loan Insurance Policy is as follows:
Minimum entry age of the policy
Maximum entry age of the policy
1 year, 2 years, or 3 years
Maximum sum insured
Up to 1 cr.
Premium paying frequency
Monthly, quarterly, half-yearly, and yearly.
Not required if the person insured is below 45 years of age or the sum insured is below 1 crore
*The above information is subject to change as per the norms of the insurance provider.
Claim Process of SBI Loan Insurance Policy
The claim process of the policy is as follows:
- In case of the policyholder's death, or permanent disablement, or detection of critical illness or job loss, inform the policy provider company about the same.
- Fill a claim form and submit it to SBI General Insurance Company along with the necessary documents required.
- Once the form is received, SBI will verify the documents and inform the nominee within 7-10 days.
- Soon after this, the company will transfer the outstanding loan to the loan company from time to time or send the EMI's to the policyholder.
Documents Required for the Claim Process
The nominee must submit all the necessary documents to claim the loan amount in case of death or accident. The documents required are:
- A second copy of the consultation letter and prescription of the doctor, in case of disablement.
- For accidental hospitalization, one must submit an FIR of the accident.
- Signed up claim form is to be submitted along with the other documents.
- Various medical certificates & related treatments bill, in case of disablement are required.
- Death certificate from the local government body is required in case of a death claim.
- Additional documents can be asked by the insurer.
After submitting necessary documents by the nominee, SBI will inform about the claim approval.
How to Buy the SBI Loan Insurance Policy?
The SBI Loan Insurance plan can be bought online. Here is the stepwise process to buy the plan.
- For buying, visit Paisawiki.com to collect all the plan details.
- After knowing the details, select SBI Policy to buy. Select on the 'Buy Now' button.
- A new page will open, asking the customer to fill up all the necessary personal details to create a new account. Select 'Continue'.
- Enter all policy details like age, name, number of policyholders, etc. Select the sum insured, policy tenure, etc. from the preselected menu.
- For calculating the premium amount, paisawiki.com has a premium calculator. After calculating the premium amount, go to the next section.
- In this step, the applicant can choose to add riders for accidental coverage after selecting to go to the next section.
- Enter any other relevant details.
- Upload the essential documents asked by the website.
- Agree to the terms & conditions of the policy.
- Enter the bank details to pay for the premium amount.
After the payment process is completed, the person will be sent with the policy document through email.
Under offline process, one can visit the nearest branch office of SBI General Insurance Company, complete the formalities with the insurance officer, pay the premiums and get the policy document.
Documents Required to Apply for the SBI Loan Insurance plan
The documents required to apply SBI Loan Insurance are:
- Coloured photograph passport size
- For Age Proof: School or College Leaving Certificate, Voter Card, Permanent Account Number, i.e., PAN card, Birth Certificate, AADHAR Card, Passport and Driving License
- For Address Proof: Ration Card, Electricity Bill, Utility Bill, Passport, Postpaid Bill, Telephone Bill, Bank A/C statement,
- Photo ID Proof: Voter ID, Aadhar Card, Driving License, PAN card, and Passport
Renewal Process of the SBI Loan Insurance Plan
The renewal process of the plan is as follows:
- Visit the paisawiki.com website.
- Select the policy renewal button. Enter the policy number from the policy document and continue.
- On this page, one needs to enter the details like email id, mobile number, etc.
- Select the ‘Renew Plan’ button.
- In this step, the person insured can add or remove members.
- If new members are included in the policy, add their details. Upload KYC documents. For a change in policy details, calculate the new premium using the loan premium calculator.
- Select the next button.
- After changing the details, the policyholder needs to agree to the new policy terms. Pay the renewal premium.
After payment, the new policy documents will be mailed to the person insured.
For renewing the policy offline, visit the SBI General branch nearby, pay the premiums online and get the renewed policy.
Ans: The rate of premium depends on
- Loan term
- Policy tenure
- Person insured's age.
Ans: This plan is available in 2 options:
- Fixed sum insured basis
- Reducing sum insured basis
Ans: If the person has missed a premium, a grace period is provided, within which the premiums required to be paid. If not the policy lapses.
Ans: Yes, the self-employed person is eligible for this plan. But he/she won't be able to avail the job loss feature under this plan, but they can get a rebate of 3% on the premiums paid.
Ans: A waiting period of 90 days is applicable in case of critical illness claim.
Written By: Paisawiki - Updated: 12 February 2021