Mortgage Repayment Insurance – Foresee the Unforeseen
Today, most banking entities request the hiring of life insurance linked to a mortgage when granting it. This is the hiring of life insurance, in which the mortgage loan is specified as the beneficiary. If the beneficiary of the loan dies, the bank will collect the insurance to pay the rest of the debt.
Information is power
In this way, it is vitally important to refer to mortgage life insurance, and the abuse of power carried out by many financial entities. Users believe that mandatory life insurance is needed in the same entity.
Life insurance is linked to a mortgage.
Although there is no legislative obligation on this aspect, most banks allow themselves to require the contracting of life insurance. They usually do it with collaborating or own insurance companies, and although they cannot present it as an exclusive requirement, they link it to obtaining the loan.
Good business for the bank.
Own insurers provide a substantial profit margin for the company because they do not compete on an equal footing with other insurers and charge a higher margin to the user, who is considered a “captive” client. Virtually all financial institution clients accept the conditions they demand, mainly due to the need to grant a mortgage.
What are you going to do?
Calculate the cost of your life insurance. If the mortgage is not met due to disability or death, then the beneficiary will be the bank.
Find out the total cost of the life insurance proposed by the bank
Find out how much the bank is charging you for life insurance. Compare and demand that mortgage-linked life insurance not be included; legally, they cannot refuse to grant the mortgage for this reason.
Take out life insurance on your own
Hire life insurance with a brokerage or insurance company. Their primary business is insurance, and they will offer you a better solution at a much better price.
Banking: Single charge to make claims and returns difficult
Another trick some financial entities carry out to avoid changing or ceasing the life insurance contract with the bank is collecting the insurance through a single premium.
This implies that the client pays the total cost of the insurance in one go. This payment is made when the mortgage is constituted, adding the insurance amount to the loan’s capital.
This makes it extremely difficult, if not impossible, for the client to choose an annual life insurance comparison and decide what is best for him.
Before formalising the mortgage with your entity, you should contact expert mortgage insurance advisers.
Does hiring insurance lower the price of the mortgage?
It is convenient to calculate separately how much the loan would cost if some insurance is contracted or not. In addition to life insurance, banks often offer home insurance when acquiring mortgages. If the client does not take out the home insurance usually provided by the bank, he must take out damage insurance with fire protection with the company of his choice.
The final amount will depend on the borrowed capital, the interest, and the insurance premium, so it is essential to calculate the amount to be paid in case of contracting the home insurance with the bank, with its corresponding savings, and if it is contracted with another entity. The insurer is other than the bank.