Online Home Loan Insurance Is Up To 72% Cheaper And Now Comes With Zero GST

With home loans becoming an integral part of household financial planning in India, the financial risk associated with long-term borrowing has also grown. Property prices remain high, and loan tenures now commonly stretch to 20 or even 30 years. 

In such a scenario, protecting families from the burden of outstanding liabilities in the event of a borrower’s death has become crucial. This is where home loan insurance plays a vital role. However, while protection is necessary, the way Indians buy this cover is now undergoing a significant transformation, driven by the rise of online home loan insurance.

How The Online Model Is Reshaping Cost And Transparency

Traditionally, home loan insurance has been sold offline and bundled with the loan by banks and housing finance companies. This approach has long been criticised for being opaque and inflexible. Customers had limited choice, little visibility on pricing, and were often locked into long-term premium commitments.

In contrast, online home loan insurance follows a direct-to-customer pricing model. According to a detailed comparison published by Business Standard, online plans can be up to 72% cheaper than offline bundled policies over a 20-year tenure.

For a 30-year-old borrower opting for a ₹1 crore cover at an 8% interest rate, the cost difference is substantial.
 

Offline prices are based on industry estimates; online prices are for regular pay plans.

As reported by Business Standard, this means a borrower can save over ₹4.3 lakh over the policy term simply by choosing the online route.

Zero GST Further Strengthens The Case

Another major factor improving affordability is the removal of GST on individual insurance policies, which earlier attracted 18% tax. According to coverage by LiveMint and Economic Times, the government’s move to eliminate GST on certain individual insurance products directly reduces the cost burden for households.

This zero-GST structure is now being reflected in online home loan insurance pricing, making long-term protection significantly cheaper compared to legacy bundled products.

What Borrowers Were Dealing With Earlier

Historically, most borrowers were pushed into buying insurance bundled with their loan. These plans were rigid, often paid as a single premium or added to the loan amount, increasing the interest burden. Foreclosing or refinancing the loan usually meant losing a portion of the premium. There was also limited clarity on commissions and cost structures.

More importantly, in many cases, the claim payout was structured to go directly to the lender, not the family, reducing financial flexibility during already difficult times.

Why Awareness Remains Limited Despite Clear Benefits

Despite the strong financial logic, awareness around independent online home loan insurance remains low. As reported by The Hans India, many borrowers are still unaware that such products can be purchased separately and are not mandatory to buy from the lender.

To address this gap, Policybazaar has launched a consumer-first online home loan insurance product that can be purchased independently, a move also reported by The Times of India.

How Online Plans Fit Modern Borrowing Needs

Modern borrowers want affordability, flexibility and control. Online policies allow customers to align coverage with their outstanding loan, adjust it when they partially prepay, and foreclose without losing money on unused insurance.

Another key shift is in claim settlement design.
 

The Broader Industry Context

According to LoansJagat’s analysis on GST and insurance affordability, removing tax barriers and improving transparency can significantly improve household adoption of protection products.

Industry experts believe this shift will reduce mis-selling, improve insurance penetration and align protection products with real consumer needs.

Conclusion

With savings of up to 72%, zero GST and far greater flexibility, online home loan insurance is steadily emerging as the smarter, more transparent way for Indian borrowers to protect their families in a changing credit landscape.