Many of the times, your financial planner have asked you to buy a term insurance policy which is good for you and your family's future. At the same time they might have tried to sell you an insurance cover with home loan known as HLPP. This insurance cover states that in case of your death, the insurance firm will pay the remaining home loan amount to the bank. In simple words, if you have purchase your home through loan, your family can continue living in that in case of your death. Both have their own benefits but you should plan to buy a term insurance plan instead of an HLPP.   
 
Home loan Cover:
As the commission on house loans are much higher than any other plans, your financial planner will try to sell you off a home loan insurance. As buying a home is the biggest investment of your life, the final call is yours. If we seriously talk of an home loan cover, it means that you are taking a huge loan and by the time you pay it completely, you won't be declared as the owner of the house. In case, if you die during the entire duration of loan repayment, your family will not be evicted from the home just because you have taken an insurance cover against the loan. This makes the sense for insuring your home loan but if you ask me if it is the best choice, I would say 'NO'. A term life insurance is a wise option over home loan cover.

HLPP vs Term Insurance:
Both, home loan protection plan(HLPP) and term insurance are quite similar in their functioning. The risk cover will be equal to the outstanding loan amount at any point of time, but home loan insurance works on reducing balance principle. The size of the cover reduces gradually as loan amount reduces. For ex: A person borrow a house loan amounting Rs 30 Lakh for 20 years at the interest rate of 9 in February 2009. Parallel to that the person has taken an HLPP with a cover of Rs 30 Lakh by paying a single premium of specific amount. After seven years, the outstanding loan amount will be around 20 lakhs. If by any chance, the borrower dies, the insurance firm will pay the outstanding loan amount to the bank or borrower's family and the family will be almost out of finances. On the contrary, if the same example is taken for the term insurance, the family will get the full insurance amount that is Rs  30 Lakh. Thus, even after paying the balance home loan, the family is left with a big amount of Rs 10 Lakh.

So, buying a term insurance policy with higher premium outgo is better than home loan protection plan. 
The main objective of buying a term insurance is that the life cover remain constant over a period of time but in case of HLPP, it keeps reducing.    

The other benefit of buying a term insurance is that you can pay premium in installments but in HLPP you have to pay one-time premium.

Thus, opt a term insurance over an HLPP as it is cheaper and better.   
            

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