According to some reports and many news in the press, the pandemic has accelerated the contracting of life insurance in Spain. Although Spaniards, and especially the younger ones, are very reluctant to take out insurance that is not mandatory, such as car or home insurance, the pandemic and its consequences have greatly influenced the search for protection against unforeseen events. health such as death or permanent disability.
One of the cases where life insurance is normally used is with the purchase of a house and its corresponding mortgage. Banks generally oblige buyers who apply for a mortgage to take out a life insurance policy to ensure the collection of the amount of the mortgage and thus minimize the risk of credit default.
Banks are generally the beneficiaries of this life insurance and for this reason they propose the insurer with which they have agreements and the conditions of life insurance. However, these requirements are not mandatory. The applicant for a mortgage can take out life insurance with the company that he chooses and can set the amounts and conditions of his life insurance taking into account not only a case of death, but also cases of disability that require capital broader than the mere mortgage by having to face other types of additional expenses.
What happens if the contracted capital of the life insurance is greater than the amount of the mortgage loan? If the capital is constant, the beneficiary will be the legal heirs or the person designated in the policy, being able to pay off the mortgage and receive the remaining amount.
Choosing the conditions of life insurance well means not only avoiding unnecessary expenses in the amount of payments that at the end of the life of a mortgage can be quite high, but also adapting to personal circumstances and the risks of the circumstances of life of each insured. Having good information and being advised by professionals on your personal contracting conditions can save the insured an extra payment in the premium and will continue to protect him against the possible claims for which he has coverage.
Many bank customers wonder if life insurance is necessary when taking out a mortgage and before the requirement of the financial institution, they contract their policy directly with the bank. Although it is not mandatory to have life insurance to sign your mortgage, banks will require such a guarantee. Currently, according to different consumer organizations, only 4% of mortgage holders decide to reject the “offer” of the banks and contract a personalized life insurance adapted to their vital circumstances with coverages studied for each case and policy amounts easily assumable.
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