The home owner's obligation to pay the loan is deferred until the owner/annuitant dies and then the home is either sold by the bank or the legal heirs reclaim the property by repaying the interest portion only, because the principal or amount equal to the purchase price will be returned by SUD Life.
State-run Union Bank of India has signed a memorandum of understanding (MoU) with Star Union Dai-ichi Life insurance Co Ltd (SUD Life) to launch its reverse mortgage loan enabled annuity plan (RMLeA).
According to the agreement, Union Bank will offer SUD Life's RMLeA to its potential customers among the home owning senior citizens. The house owning senior citizens, who are the target group for this product, will avail a (reverse) mortgage loan from Union Bank, which will be utilised for purchasing a life annuity from SUD Life. The unique proposition of the scheme is that it releases the home equity, thus enabling the homeowner to afford a comfortable lifestyle with the regular annuity income. Under the scheme, Union bank will offer the annuitant, a life annuity with return of purchase price on the death of the annuitant, Union Bank said in a statement.
The home owner's obligation to pay the loan is deferred until the owner/annuitant dies; the home is either sold by the bank or the legal heirs reclaim the property by repaying the interest portion only, because the principal (equal to the purchase price) will be returned by SUD Life. Reverse Mortgage Loan enabled annuity plan can be bought for anyone between the ages of 55 years to 85 years.
"The life insurance industry has witnessed dramatic change in the past few months. The move to align with Union Bank of India is a strategic one, taken to ensure that we satisfy the varied requirements of the elderly consumer segment and actively provide them with superior products and services," said Kamalji Sahay, chief executive, SUD Life.
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