Do I have to buy SBI Rinn Raksha to get an education loan for studying abroad?
SBI Life Rinn Raksha is a credit life insurance policy that pays off your outstanding loan balance if the student or co-applicant dies or becomes permanently disabled. It is not legally mandatory under RBI guidelines, but SBI requires your loan to be covered by life insurance.
SBI Life Rinn Raksha is a credit life insurance policy that covers your outstanding education loan balance. It is not legally mandatory under RBI guidelines, but SBI requires your loan to be covered by life insurance.
Key Features
| Feature | What it means |
|---|---|
| Reducing coverage | Cover matches your outstanding loan balance and falls as you repay |
| Interest concession | SBI offers a 0.50% discount on your interest rate if you opt for it |
| Joint coverage | Up to two co-borrowers can be covered with the student |
| Premium | Can be added into your loan amount instead of being paid upfront |
| Tax benefit | Premium is described as eligible for deductions under Section 80C |
If You Do Not Choose It
You can assign an equivalent personal term insurance policy to the bank instead, but you may lose the 0.50% interest concession. Tax rules and bank terms can change, so confirm them before you decide.
My Advice
Compare the interest concession against the cost and cover of a separate term policy before you decide. Ask the bank to confirm the current concession and insurance requirement in writing.
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