The Increasing Popularity of Life Insurance Linked to Mortgages: 42% of Mortgages in 2023 Include Life Insurance

Although not mandatory, purchasing life insurance linked to the mortgage has become an increasingly popular option among home buyers. So much so that, according to data from Hipotecas.com, UCI’s online channel, an entity specializing in sustainable financing, 42% of mortgages signed in 2023 include life insurance.

Since the entry into force of the Real Estate Credit Contracts Law in 2019, financial entities cannot condition the granting of loans to the contracting of these products, although they can offer interest reductions when subscribing to these policies.

Noelia Suarezhuman connecting manager of Hipotecas.com, points to an increase in its hiring as a result of the pandemic “due to the protection offered by these policies”. The spokesperson for the financial institution states that “Given the scenario of uncertainty and rising rates that we are experiencing, we have perceived greater interest in these solutions, since they cover the holder or holders of a loan in the event of death or permanent disability, preventing heirs from paying the debt.

From UCI’s online channel they detail the customer profile that usually opts for taking out life insurance: middle-aged people or those with dependents, who usually take out insurance in the first years of the loan, when the debt is highest.

Taking out this type of policy has also become the safest option in recent years because, if you have not taken out life insurance: “There are heirs who find themselves in the situation of rejecting the inheritance of a home or accepting it for the benefit of inventory due to the inability to meet the outstanding debt,” Suárez indicates.

Among the main advantages of taking out life insurance along with a mortgage, the main one is the peace of mind of knowing that, if one day it is necessary to resort to this insurance, the owner or his or her family will benefit by canceling the loan or seeing it reduced. In addition, these solutions usually cover the entire amount of the loan, although, as Hipotecas.com points out, “It is advisable to carefully analyze the conditions of the policies to ensure the percentage they cover.”.