Question

Roberto has purchased critical-illness insurance on his home equity loan. (A loan he got from his...

Roberto has purchased critical-illness insurance on his home equity loan. (A loan he got from his bank, using the paid-off portion of his house as security). If he becomes ill from any of the serious illnesses listed on the policy, such as cancer, the insurance will pay off the home equity loan.

Is this a smart insurance choice? Are there better options to protect himself? Explain your answer

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Answer #1

Home is an important asset to a family. If something happens to Robert and the family is not being able to pay-off the loan, then the house will be taken. So this is a very serious scenario. Insurance on home loan is a very practical and necessary step. So the insurance choice is smart.

Robert should have also thought about other risks, like if he gets unemployed suddenly or meets with an accident which may hamper his regular income. Then in that case it will be difficult to pay-off the loan. So Robert should purchase insurance which will cover his loan in case he is unemployed or meets severe accidents as well.

Securing house loan with insurance is a safe way to cover family from adverse situations.

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