Life insurance is a crucial policy under life insurance tied to the mortgage. Most banks require this “protection” before they will sign the mortgage. Most people who hire it need to be made aware that you do not have to take the product that the bank gives you.
This page delves into life insurance: what it covers, how much it is worth, whether it is required, and the options for comparing different companies.
WHAT DOES MORTGAGE LIFE INSURANCE COVER?
This expense is covered by life insurance linked to a mortgage loan in the event of death and, optionally, permanent disability. In this way, it protects family members and loved ones from the obligation incurred by the mortgage loan in the event of death.
These are the main coverages:
- Death (MAIN COVER)
- Absolute and permanent disability (OPTIONAL)
- Professional and permanent disability (OPTIONAL)
- Additional capital in case of death or disability due to accident (OPTIONAL)
WHY TAKE OUT LIFE INSURANCE WITH THE MORTGAGE?
What happens if the individual who signed the mortgage passes away? Mortgage life insurance, which is tied to the mortgage, was developed to avoid debts and leave the couple or the entire family exposed. As a result, the primary guarantee of this type of coverage is death, though, as previously stated, disability can be added.
IS LIFE INSURANCE MANDATORY ON A MORTGAGE?
No, although many banks require you to have life insurance in order to get a home loan. The bank can require you to obtain life insurance, but it cannot compel you to purchase one of its products. In other words, the law allows you to examine several mortgage life insurance policies and select the one that provides you with the best terms.
In any case, taking out a mortgage without life insurance is extremely rare, as it ensures family financial security against the financial obligations that the mortgage entails in the event of death or, in some cases, permanent disability.
It should be noted that the legislation requires that, at the very least, when taking out a mortgage, you have insurance that covers fire damage. In practice, house insurance and life insurance are typically purchased to supplement this bare-bones fire protection.
WHAT HAPPENS WHEN THERE ARE TWO HOLDERS?
Life insurance can be purchased at 100% of the borrowed capital or 50% each if the mortgage loan is received by two people. Of course, if the insured need additional money owing to their particular circumstances, this insurance can be raised by the contractable insured sum.
MORTGAGE LIFE INSURANCE PRICE HOW MUCH DOES IT COST?
To calculate the price of mortgage insurance, it is necessary to take into account mainly three factors:
- The age of the people who take out the insurance and who have signed the mortgage. The price changes substantially if you are in your thirties or over 50 years of age.
- The toppings . If it is only death or the most complete option that also includes permanent disability.
- Entity with which you subscribe . According to a study carried out annually by INESE in collaboration with the Global Actuarial consultancy, the rates applied by insurers are significantly lower, between 30 and 35% on average , than the rates applied by banks.
According to the most recent INESE comparison analysis, the data shows significant discrepancies between insurance companies and bank-insurers, as it does every year.
According to this report, the average premium in bank insurers is 446.86 euros and 249.26 euros in insurance companies, a 79% increase.
Similarly, in the final year of the study, insurance companies reduced their costs by 2.5%, while bank-insurers increased them by 7.6%.
HOW TO COMPARE MORTGAGE LIFE INSURANCE?
As you can see, mortgage life insurance is a decision that might cost you money year after year. To avoid overpaying and to obtain the policy that best meets your needs, you should evaluate offers from multiple insurers to check if the request is better than the one provided by your bank.
In this regard, the best alternative is to use a brokerage, a “flesh and blood” insurance comparison, that will allow you to examine all the specifics with a professional who has the independence of being able to recommend the most advantageous policy among more than twenty firms.
IF I HAVE ALREADY CONTRACTED IT… CAN I CANCEL THE LIFE INSURANCE WITH MY BANK?
The insurance is renewed every year. Therefore you can cancel the bank’s insurance and employ the insurance provider of your choice before the renewal. If you do not want to renew your insurance, you must notify the company one month in advance.
It’s a standard procedure to underwrite it with a bank for the first year, then switch to a brokerage. Even yet, you can deny the bank’s offer from the start, something many people need to be aware of when they sign the mortgage. To avoid missing these deadlines, set the alarm before renewing with the bank.