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Rajeev Mishra, a middle management professional at a private sector firm in Delhi, wanted to transfer a <keyword id="6354730" type="UNKNOWN" weightage="100" keywordseo="Home-loan">home loan</keyword> he had taken a few years ago as the interest being charged was higher than what’s available in the market and he also needed a top-up loan. With zero prepayment charges, discounted processing fees and top-up loans available with the home loan itself, along with balance transfer, Mishra thought he had a real opportunity to save money. 
 However, he had a shock when he realised that the life <keyword id="35450" type="COMPANY" weightage="100" keywordseo="insurance">insurance</keyword> cover he paid for and bought along with his existing home loan to ensure that his family wasn’t saddled with loan repayment in case of an unfortunate incident was not transferable. The reason the policy could not be transferred is that Mishra had only paid to become a member of a master policy that his bank had subscribed to and the policy stated that the cover would cease when the loan is refinanced, among other reasons. Now, there’s hardly any customer who reads this fine print in the insurance policy and there probably isn’t a sales executive who ever bothered to explain this to a customer. 
 
It means Mishra will have to buy another insurance cover and the current insurance company would, at best, pay him a cash surrender value for the residual tenure of his existing single-premium policy. 
 
This raises a dilemma that a lot of home-loan borrowers in India may not even be aware of. Should they or should they not buy an insurance with a home loan without restricting the future ability to shift the loan? 
 
Here’s a solution. Since buying life insurance with a home loan is surely a wise thing to do, people should surely do so. But instead of buying the insurance from the home loan provider, the customer may simply buy a term plan online (either single premium or annual premium) and the members of his/her family should become the beneficiaries. This way, all objectives will be met: 
 
1. The customer’s life is insured. 
2. The family will not be burdened with loan repayment in case of an unfortunate incident. 
3. The customer can freely change home loan provider if he/she wishes to. 
 
Another solution could be the regulatory intervention by the RBI and the IRDA to ensure that life policies sold by banks, along with long tenure loans like home loans, should be transferable from one lender to another (as beneficiary) as the customer is paying for these. However, complementary policies paid by the banks could possibly be exempted from this transferability requirement. In the absence of such a regulation, the entire effort to protect customer interest by making loan takeovers easy is likely to get compromised. 
 
This article is written by Gaurav Gupta. 
About the author: Gaurav Gupta is the founder and CEO of <keyword id="2450296" type="UNKNOWN" weightage="100" keywordseo="Myloancare">Myloancare</keyword>.in that focuses on helping individuals and SMEs manage their loans better. 
 
Image: Thinkstock

Taking Insurance With Home Loan? Read This First...

Management graduates earlier used to dream about joining <a href="http://www.businessinsider.in/searchresult.cms?query=investment+banking+">investment banking</a> after completing their course, but the situation has changed now. The high burnout rates and long working hours are pushing them to leave high-paying, prestigious jobs at marquee financial institutions to join <keyword id="6362513" type="ORGANIZATION" weightage="100" keywordseo="Startups">startups</keyword> or set up their own ventures. 
 
Such developments will mark a major shift in their career track and leave investment banks scrambling for top talent. 
 
In the past few months, at least six investment bankers from top firms including <a href="http://www.businessinsider.in/searchresult.cms?query=Bank+of+America+Merrill+Lynch">Bank of America Merrill Lynch</a>, <keyword id="39409" type="COMPANY" weightage="80" keywordseo="Kotak">Kotak</keyword> and <keyword id="82699" type="COMPANY" weightage="40" keywordseo="Macquarie">Macquarie</keyword> have joined startups to be their own bosses. 
 On being asked about the reasons behind such a drastic change, Sumit Agarwal, 30, who quit the post of vice-president at Bank of America <keyword id="6374847" type="CITY" weightage="80" keywordseo="Merrill-Lynch">Merrill Lynch</keyword> in April, said: "There is no work-life balance in <keyword id="48051" type="ORGANIZATION" weightage="100" keywordseo="investment-banking">investment banking</keyword>." 
 
Agarwal, who is now the CEO of his own firm, said: "I used to work 14-15 hours a day, cancelling all family plans. I have seen my seniors do that." Agarwal, who started his career with the US Bank in 2008 after graduating from the Indian Institute of Management, Bangalore, said he loved his job, exhausting as it was. But "I couldn't do this for the next 15 years. I have the energy to run around for 7-8 years and not more." 
 
The <a href="http://www.businessinsider.in/searchresult.cms?query=Bank+of+America+Merrill+Lynch">startup</a> wave has been attracting talent from sectors such as consumer goods and telecom and even traditional banking. Deal makers joining this exodus is a reflection of global trends, with investment banking acting as a springboard for their new careers. Human resource specialists said the shift will continue. 
 
"The year 2009 saw several bankers being laid off, a forced move that saw many taking up alternate careers like joining corporates. This time around, in 2015, even when banks are selectively hiring, bankers have made a conscious decision to resign and take up a challenging role of setting up firms," said Ajit Premkumar, director, EAL Search, a top recruitment services firm. "We have seen vibrant support to young smart entrepreneurs who have an idea and can deliver. This clearly has attracted a pool of highquality individuals from banking." 
 
To be sure, startups don't necessarily offer the most relaxed work environment. On the other hand, they do allow people to set their own rules. Gaurav Gupta, 39, echoed the sentiment expressed by Agarwal. "Investment banking is not as cushy as it looks from outside," he said. "There's a lot of hard work involved." 
 
After 10 years of service, Gupta quit Kotak Investment Banking in March 2014 to start Myloancare.in with his batchmate from engineering college. "It's hard to say bye to a well-paying job. There's a fear factor," said Gupta. 
 
"We bankers advise companies and <a href="http://www.businessinsider.in/searchresult.cms?query=Bank+of+America+Merrill+Lynch">entrepreneurs</a> how to go about with their ventures. There came a point in my life when I asked myself how would I go about if I were to start my own venture. If others can take the entrepreneurial plunge, I too can," said Gupta. 
 Gupta's <keyword id="6354730" type="UNKNOWN" weightage="40" keywordseo="Home-loan">home loan</keyword> rate comparison site was born out of a bad experience with getting his own mortgage. 
 
His former colleague Sumit Dhingra has also taken the entrepreneurial path. Dhingra, 32, who interned with Kotak during his MBA and subsequently joined the investment bank, left some months ago to cofound ServiceBob-.com, a Gurgaon-based facilities management business. 
 
He said dealing with entrepreneurs from the <a href="http://www.businessinsider.in/searchresult.cms?query=Bank+of+America+Merrill+Lynch">technology</a> and internet sectors had a rub-off effect, motivating him to become an entrepreneur. Likewise with Anand Dalmia, who was covering tech for Macquarie. "Investment banking is one of the best professions. Anything better than I-banking is being an entrepreneur and I want to try it," said Dalmia, who will be launching his own technology-based <keyword id="6354241" type="COMPANY" weightage="40" keywordseo="Financial-Services">financial services</keyword> firm next month. 
 
(Image: Indiatimes)

No burnouts please! Professionals now prefer start-ups over investment banks to avoid long working hours

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Taking Insurance With Home Loan? Read This First...

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No burnouts please! Professionals now prefer start-ups over investment banks to avoid long working hours

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