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What To Do When Your Bank Pushes You To Buy Insurance Policy Along With Home Loan?


Apart from daily banking activities, today bank have started selling other financial products like ULIP’s or insurance policies. It is been observed that banks are trying all kind of fair and unfair strategies to sell there insurance products. The most common unfair mean that banks are opting to sell insurance products is by clubbing insurance policy with Home Loan. Which means if you want your Home Loan approval then it is mandatory for you to buy insurance policy offered by the bank.

After all major processing, at the last stage of approval of your home loan, if your bank asked you to buy an insurance product compulsorily then you may not say no. As saying ‘No’ can take away all your efforts that you put in to get your Home Loan approved.

For Example, you have applied for a home loan for Rs 40 Lac to purchase a property. You submitted all the papers along with processing fees to get the same approved as soon as possible as the owner of that property has asked you to submit the entire money within few days. If at the final stage of approval, your bank force you to buy an insurance policy against which you will have to pay a premium of Rs 25000 p.a they you will forcefully buy it else you will loose the property because of delay in home loan.

forced selling with home loan


If you face any such situation then What will you do? below are few ways that can help to fight with any such situation:-

Talk To The Bank Official

The very first thing that you can do is talk to the bank official who is coordinating with you regarding the approval of you home loan request. You can either clarify this at the beginning i.e at the time of applying for the home loan or discussed it later that you don’t need any insurance policy bundled with home loan.

File An RTI

If you are forced to buy insurance policy along with home loan from your bank then you can file an RTI to IRDA for clarification and also submit a copy of the same to the bank to make them reconsider on there offer. Although IRDA has already clarified this in a Discussion paper on Tying/Bundling in Insurance, that bundling of two or more products without the consent of customer is unfair.

IRDA paper

ALSO READ : Home Loan From Parents Or Relatives Vs. Home Loan From Banks

Take There Offer In Writing

Before accepting there offer to buy insurance policy for the approval of home loan ask the bank official to give this in writing. Tell them you want to enquire about this restriction from the banking ombudsman. If they don’t give the same in writing then tell them that you will file a complaint with banking ombudsman with the name of the officials, there designations and bank branch to get clarification on this matter.

Don’t Accept Insurance Offer & Wait

If you stay calm and reject the offer by hiding your desperation, you may get home loan from the same bank without any insurance attached within few days. As banks use these tack tics on customers who need loan approval on urgent basis. As bank get to know that this customer cant afford any delay so he will accept all kind of restriction attached to the approval of home loan.

Go To Consumer Court

You can take this matter to consumer court for a better resolution as your bank will have to follow the judgment from the consumer court.

Accept Insurance Policy & Return in Free Lookup Period

If you find all the other options are not working then you can do one safest way to get your home loan approval without the burden of an unnecessary insurance policy. Buy the policy buy paying first insurance premium and wait until you get your insurance papers in hand. Once you receive your insurance papers, initiate the process to return the policy within Free Lookup Period i.e 15 days from the day you receive your policy documents in hand.

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