CA Sakchi Jain Breaks Down How to Avoid Unnecessary Insurance in Loan Agreements

Finance influencer CA Sakchi Jain shares an important reminder many borrowers overlook: insurance is not a compulsory part of taking a loan. Yet, countless banks quietly slip it into loan agreements, making it seem like a mandatory requirement attached to the approval process. This misconception costs borrowers more than they realize, often increasing the overall loan burden without offering proportionate value.

The Truth Banks Won't Highlight:

While lenders are allowed to offer insurance for loan protection, they cannot compel you to buy their in‑house policy. Many institutions subtly position these add‑ons as “rules” or “standard procedure,” especially during home, personal, or auto loan approvals. CA Sakchi Jain emphasises that this is not legal and certainly not binding on you as a borrower.

You always have the right to evaluate different insurance providers, compare premiums, and decide whether you even want such coverage in the first place. Banks may pitch bundled insurance as a safety measure, but choosing a third‑party insurer often gives you wider benefits and lower premiums.

Why This One Step Saves Serious Money:

Loan‑linked insurance is usually paid upfront and added to your loan amount. This means:

• You pay interest on the insurance cost.

• The total EMI increases.

• Your long‑term payout becomes significantly higher.

By simply declining the bank‑suggested policy and choosing your own provider or opting out entirely, you could save a substantial sum across the loan tenure. For long-term loans like home loans, this difference can run into tens of thousands.

Read Before You Sign:

CA Sakchi Jain stresses one golden rule: never sign loan documents without scrutinizing the cost breakup. Look for hidden lines such as:

• Premium charges

• Processing fees with unexplained hikes

• Add‑ons labelled as “standard” or “recommended”

If anything feels unclear or unnecessary, ask the bank to remove it. You are fully within your rights to question every charge.

You control your loan decisions, not the lender. A few minutes of careful checking can protect you from years of avoidable payments. Be aware, stay sharp, and never let fine print drain your money.

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