Forced to Buy Home Loan Insurance? Know Your Rights

Do you have mutual fund, insurance and personal finance-related queries?
Please ask your questions HERE and rediffGURU Naveenn Kummar, an AMFI-registered, IRDAI-licensed, qualified financial planner, and founder of Alenova Financial Services, will answer them.

Girish: Hi, I am 55 years of age, an NRI working in Dubai and my company has a medical insurance policy that covers all medical expenses for me and my wife all over the world.
In 5 years' time, upon retirement, I will relocate back to India. Will I be able to take a medical insurance policy for myself and my wife at the age of 60 years? If I take a medical insurance policy now, would it help in reducing the insurance premium? Kindly advice.

You are 55, working in Dubai, and currently covered under your company's medical insurance worldwide. That cover is excellent, but please remember one important thing: it ends the day your employment ends. Health insurance planning has to look beyond employment.

Can you take a health insurance policy in India at age 60?

Yes, you can. Most insurers in India do allow entry at 60 years and even later.

However, at that age:

• Premiums are significantly higher
• Medical tests and scrutiny are much stricter
• Any lifestyle condition or past medical history can lead to waiting periods, exclusions, or higher premiums
• So while it is possible, it is not ideal to start fresh at 60.

Will taking a medical insurance policy now help reduce premium later?

The bigger benefit is not just premium, but certainty and continuity.

If you take a policy now at 55:

• You enter at a lower age slab
• Mandatory waiting periods (usually 2-4 years) get completed well before retirement
• By the time you are 60, the policy becomes mature and far more useful
• Underwriting happens when you are younger and healthier
• Premiums will still rise with age, but you avoid the sharp jump and uncertainty of entering as a new senior citizen.

But since you already have full medical cover, is this necessary?

• Think of this Indian policy as a retirement safety net, not a replacement for your employer cover.
• You do not need to actively use it now.
• You just need it to run in the background, so that when you return to India, you are not forced to buy insurance at the worst possible time.
• Many NRIs make the mistake of postponing this decision and then struggle at 60 when options become limited.

What kind of policy should you consider?

Keep it straightforward:

• A family floater for you and your wife
• Decent coverage, not the bare minimum
• Focus on hospitalisation benefits
• Buy it with the intention of continuing it for life
• Avoid over engineering the policy. Simplicity works best in health insurance.

Final advice

• Health insurance is one area where early action quietly pays off later.
• You may never thank yourself at 60 for buying a policy at 55, but you will definitely regret not doing it if a medical issue arises.

Anonymous: Hello Naveen sir I had 2 questions:

Q1. I had taken a Bajaj Allianz familycare insurance for my parents around 2011 w/ Rs 20K premium/month. I diligently paid upto 2015. However there was a major life and death incident around 2015 after which I submitted official hospitalization claims to Bajaj Allianz for my parents.
The agent took all hard copies and said they were lost in postal transit from Nagpur to Pune. I had multiple arguments and raised grievance with Bajaj higher ups, complained about the agent too. Ironically even if all the documental evidence, FIR were genuine Bajaj Allianz stopped communicating.
I was fed up chasing them and stopped paying the premiums from 2016. The policy is now inactive.
The question is -- I understand it has been a long delay and lost case as I was frustrated to follow up, is there any way I can get my accumulated hard earned Rs.1.2 lacs premium back from Bajaj Allianz, any advice if you can share will be very helpful. I can use it for treatment and medical needs of my parents.

Q2. I recently purchased a flat with a heavy investment and took loan from HDFC. Since the loan amount is huge approx 1 Cr, HDFC mentioned (in a way forced) that I need to take an insurance from them to cover the risk. This insurance of around 15lacs was added to my loan as top up and I need to pay it off monthly in addition to my EMI (+ 14K added burden).
The question I have is -- is such an insurance really necessary to be taken from HDFC as I was totally against their proposal. I did suggest that I can instead take a term insurance from other companies which will still come out to be cheaper, but they insisted that it will be same. Please advise if it is really worth and if I have any options.

Talking about you old Bajaj Allianz health insurance policy. Can anything be recovered now?

You had a health insurance policy, not a savings or investment product. Health insurance premiums are paid only for protection during the policy year. They do not accumulate or become refundable like LIC, ULIP, or endowment plans. Once a policy lapses and a claim is not settled, there is no automatic refund of premiums, even if premiums were paid for several years.

In your case with Bajaj Allianz, the claim itself appears genuine, but the handling failed.

What happened:

• Hospitalisation claims were submitted.
• The agent collected originals and they were reportedly lost in courier transit.
• You escalated the issue, raised grievances, and filed an FIR.
• Communication eventually stopped.
• Premium payments were discontinued and the policy lapsed.
• This amounts to deficiency of service, but the long time lapse has weakened the case substantially.

Why the duplicate document route mattered:

When original discharge summaries and bills are lost, insurers normally accept duplicate hospital records, provided they are:

• Issued by the hospital on official letterhead
• Marked as certified true copies
• Supported by a loss declaration or FIR

Hospitals maintain records for many years and routinely issue such duplicates. In many cases, additional bank attestation is used to strengthen authenticity and avoid insurer objections. This process keeps the claim procedurally alive. The agent should have guided and executed this reconstruction at that stage. Since this was not done in time, the insurer later had procedural grounds to disengage.

Is recovery possible after 8-10 years?

Realistically, it is very difficult, though not completely impossible. Normal customer care routes are closed. Only legal or regulatory escalation remains.

What can still be tried?

• Insurance Ombudsman: Cost free, but chances are low due to delay.
• IRDAI grievance portal: File a detailed complaint with FIR and whatever documentation is available. Correct route, limited expectation.
• Consumer Court: Possible only if negligence and harassment can be proven. Time consuming and costly. Given premiums paid were around Rs 1.2 lakh, effort versus outcome must be weighed carefully.

Expectation setting:

• Full refund of premiums is highly unlikely.
• At best, there could be claim consideration or partial compensation.
• Missing documents and broken follow up significantly weaken the case.

Practical advice:

Do not depend on this money for current medical needs. Treat any recovery as incidental, not planned.

Q2. Home loan insurance added by HDFC: Is it mandatory or worth it?

• Short answer: No, it is not mandatory.
• Banks often push such insurance aggressively.

In your case with HDFC:

• Home loan of about Rs 1 crore
• Insurance of roughly Rs 15 lakh added
• Premium loaded into the loan as a top up
• EMI increased by about Rs 14,000
• This is a bundled selling practice.

Regulatory position:

• A bank cannot force a borrower to buy insurance from the bank or its partner.
• RBI and IRDAI allow borrowers to choose any insurer, as long as adequate risk cover exists.
• Loan approval cannot legally be linked to purchasing the bank’s insurance.

Is insurance itself needed?

Yes, risk cover for a large loan is sensible. But not in this structure.

Better structure would be:

• Pure term insurance on your life
• Sum assured equal to or slightly higher than the loan outstanding
• Policy assigned to the bank if required

This option is cheaper, transparent, flexible, and fully under your control.

Why bank loan insurance is poor value:

• Single premium plans are expensive
• Interest is paid on the insurance premium
• Coverage often reduces while cost does not
• Exit and modification are difficult

Options available:

• If within free look period, cancel immediately and adjust the premium against the loan.
• If outside free period then look, review surrender terms and assess exit loss.
• Take independent term insurance and formally inform the bank. They cannot reject valid alternate cover.
• If time permits, explore nationalised banks, which are often more flexible on insurance conditions.

Final summary:

• The health insurance claim issue is emotionally justified but legally weak due to time lapse and missed procedural recovery steps.
• The home loan insurance issue is correctable, and action taken early can significantly reduce long term cost.

• You can ask rediffGURU Naveenn Kummar your questions HERE.

Naveenn Kummar's Disclaimer/Guidance:

The above analysis is generic in nature and based on limited data shared. For accurate projections -- including inflation, tax implications, pension structure, and education cost escalation -- it is strongly advised to consult a qualified QPFP/CFP or Mutual Fund Distributor (MFD). They can help prepare a comprehensive retirement and goal-based cash flow plan tailored to your unique situation.

Financial planning is not only about returns; it's about ensuring peace of mind and aligning your money with life goals. A professional planner can help you design a safe, efficient, and realistic roadmap toward your ideal retirement.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.