The purpose of taking Insurance is to provide financial protection to your family and your assets from unfortunate eventualities such as death, accident, illness, etc. during the course of your loan tenure. A standard insurance policy, i.e. a term plan, provides financial assistance to your family in the unfortunate event of your death.
The choice of whether you need to take an insurance cover while making this application is absolutely yours and voluntary. In case you do not choose to take this insurance it’s absolutely fine. If you do, then the amount of premium payable to the insurer shall be deducted from the loan amount being disbursed to you. The insurance premium to be charged by the insurance company will be based on your age, income, demographics etc.
A Nominee is mandatory at the time of choosing for this insurance policy.