New Delhi, Nov. 3 -- Festivals in India are considered auspicious for making big purchases, and for many families, that means buying a home. This year has been no different.

Property registrations have jumped 32% from a year earlier in September, with Mumbai alone accounting for 12,000 home sales.

Roughly 80% of these homes are financed through loans, according to Knight Frank. And that's when many borrowers find themselves saddled with an insurance policy hard-sold by their lender-one that doesn't always suit their needs or even protect them adequately.

While insuring a borrower's life or property can be good practice, lenders frequently mis-sell or bundle policies that are irrelevant, inadequate, or poorly aligned with the borrower's...