Policybazaar to offer low-cost loan insurance online

MUMBAI: Policybazaar has launched an online loan insurance product offering a cheaper, flexible alternative to bank-bundled covers sold offline.Loan insurance focuses on protecting families from loan liabilities in the event of a borrower’s death. Loan insurance in India has traditionally been sold offline and bundled with loans by banks, a model that has limited customer choice, raised costs, and reduced transparency around pricing and coverage.That approach is now being challenged by online-only loan insurance products. According to industry estimates cited by Policybazaar, online loan insurance is more cost-efficient than offline covers because it is sold directly to customers, avoids distributor commissions, and follows clearer pricing structures. The cover is being offered by TATA AIA Life Insurance and HDFC Life and other insurers could be onboarded in future.The company said its online loan insurance can be purchased independently of a loan and is structured to align coverage with individual loan amounts. It said borrowers can foreclose or adjust loans without incurring additional insurance costs, while claim payouts can be directed to families rather than lenders, giving policyholders greater control. The launch comes at a time when awareness of online loan insurance products remains limited.According to the company’s illustration, for a 30-year-old borrower choosing a Rs 1 crore cover over a 20-year loan tenure at an 8% rate of interest, an offline loan insurance policy would result in a total premium outgo of around Rs 5.98 lakh, including GST. The comparable online policy would cost around Rs 1.6 lakh over the same period, translating into savings of up to 72%. Monthly premiums in the illustration decline from around Rs 2,492 for offline cover to around Rs 729 for online cover, with no GST applied to the latter, the company said.Policybazaar said the product includes accelerated payouts in the case of terminal illness, while disability covers are available as paid riders. It said the offering is currently available with select insurers, including Tata and HDFC, with additional insurers expected to be added.