Don’t Delay Your House Insurance For A Meagre Increase In Home Insurance Rates With GSTby Aditya Sehgal Blogger
While the GST move is hailed as a good one that will positively impact the market in the long run, in the short run, prices will increase. For homeowners, home insurance covers are vital. But since GST has impacted their spending, a lot of people are wondering if investing in home insurance is a wise thing to do. Let’s look at how GST has affected this market and how you can use the new taxation regime to your benefit, and then you can decide.
Home insurance is an integral part of buying a home. In fact you may opt for a house insurance while taking the home loan itself. It is an essential component of your financial planning too and will protect your real estate investments in the long run. Though the cost of a home insurance is not much in comparison to the cost of the home itself, your EMI does have an insurance component. Any increase in the insurance component will invariably increase your EMI.
Why You Need Home Insurance
Now that you have secured or are going to secure a home for yourself and your family, you need some home insurance cover too, as there may be many factors at play which can damage your property.
Natural as well as everyday factors that may affect your home like flood, fire, earthquake, landslides etc. which can partially or even completely damage your property.
There may be burglary or theft in your house which also may affect your house property.
If the house is damaged by any of these means, all the loan value would simply add to your financial liabilities without giving any benefit. That is why you need to secure it. You need to secure your house from all the conceivable perils that it may face, at least in the near future. That is why you need house insurance. But to select an insurance you first need to know what is home insurance.
What Is Home Insurance
Home insurance is like any other insurance. It protects your home against natural disasters, human threats, and other civil liabilities. To get ample coverage that gives your investment the financial assurance it deserves, you need to pay a monthly premium for it. In exchange for the regular premium, the insurance company will compensate you for any damage sustained by your house and property.
Thus, you can safeguard your investment for as long as you want it. The compensation and the terms of insurance depend usually vary and depends on a variety of factors. You can go for a 5-year term or a much longer term. You also need to select an amount from a range of home insurance covers. You can get partial coverage or go for a full coverage. But whatever type you select, you need to see that it protects against the maximum number of perils that a house property may suffer from. Now let us see how your insurance component is going to be affected by the GST regime.
Insurance As A Service
Home insurance used to attract a service charge at the rate of 15% before the implementation of GST. This included 14% service charge, 0.50 % Swachh Bharat Service and 0.50% Krishi Kalyan Cess.
In the GST regime, all the levies and taxes including service tax have been subsumed in GST. The GST for services like insurance has been fixed at 18%.
This means, the tax component of 15% has increased to 18%, which indicates an increase of 3% over the previous amount.
This may lead to an increase of 3% on your house insurance covers with a corresponding increase in EMI.
While a 3% increase may sound like a lot, you have to consider the immense benefit that house insurance covers provide. Yes, you will have to spend more for getting the insurance coverage. But if something unfortunate were to occur, you would be very glad that you kept the cover going and can now yield its benefit. This can potentially save you from making major expenses and can further stabilize your financial future. Go out and search for the best house insurance covers in the market that will give you the peace of mind you deserve.
Created on Feb 22nd 2018 05:36. Viewed 779 times.