Insurance with home loan

Question

I had taken a home loan from axis bank and it is disbursed on 22-3-2017. I got demand draft and I given it to builder.

During the loan process bank employee asked me to purchase a property insurance of Rs 1 lakh. I declined to opt for any insurance as other banks were giving loan with lower insurance amount compared to Axis bank.

The bank employee asked me to purchase Max life insurance where we have to pay 15000 per year till 11 year and after term is completed my premium amount will be returned. He mentioned that if I don't want to continue, I can cancel it after one year. I agreed to purchase Max life insurance thinking the home loan disbursal will be easy and give a cheque to him.

When my loan got disburse I see additional Rs 24000 as a property insurance. I feel cheated.

Now my question is till date Max life is not deposited that cheque so should I stop that cheque? will that affect my loan?

Can they ask me to return loan disbursement demand draft?
can they discontinue my loan?

Answer 1

It looks like the agent / bank employee was trying to cross sell you some other products that are not required.

Some banks to required an insurance to be taken, however it is very clearly spelt out.

What has happened in your specific case can't be predicted.

Max life is not deposited that cheque so should I stop that cheque? will that affect my loan?

This looks like a totally different product. This should ideally not impact your disbursed loan.

Can they ask me to return loan disbursement demand draft?

Generally No.

can they discontinue my loan?

Once disbursed Bank generally can't discontinue the loan. However they do have a generic clause that allows them to ask for full payment back immediately. This is generally done in case of default or fraud cases and not used by Banks for normal cases.