I had a question from one of my client regarding housing loan. He wanted to opt for a housing loan without making any changes in his existing investments and his insurance. After almost an hour of discussion he requested me to write an article for others to understand the relationship between Loan and Insurance.

Dear friends, loan is a liability while insurance is an asset. One may even call it a contingent asset. When we take a loan we create a liability and an asset (That is what we think). If we take loan for a vehicle it can be called an asset but asset depreciates fast and involves running cost. When we talk about property it again has high maintenance cost plus it will transfer in your name once the entire loan is repaid. So when we take a loan, we are creating a liability. To balance this liability we must create an asset. That asset is insurance.

Think of a housing loan whose installments are due and consequences that the family will have to face in your absence. Will your family recover from mental trauma, financial loss in the form of lost income, and loss of house due to inability to pay installments? For all those who have outstanding housing loan please upgrade your insurance. The amount must be such that its interest can cover the installment amount. This insurance must be over and above an insurance 3 times your yearly income.

Dear friends change your perception towards genuine insurance planners and agents. They are not to just sell insurance but they are there to provide you right advice so that you and your family live a constant standard of living under whatsoever conditions.

If you are paying a loan or planning to take a loan; and are not insured, contact us today. Special plans are available for such individuals.

Hardik Baxi,

Baxi Investment