Before proceeding with the purchase of your own home , or making a new investment using a housing loan , be aware that the bank will ask you to take out life insurance .
Throughout this article, we will clarify some essential questions on this subject, so that you can make the most advantageous choice for you.
What is the role of life insurance in mortgage loans?
Taking out life insurance is a requirement for anyone taking out a mortgage loan. This product serves as a guarantee to the financial entity that, in the event of the death or disability of the loan holder, payment of the outstanding amount is assured.
In other words, when applying for a mortgage loan, taking out life insurance is mandatory and defines your bank as the mortgage creditor in the policy.
Am I paying to protect the bank?
Although, at first glance, it may seem that this measure aims to protect, solely and exclusively, the interests of the creditor entity, this may not be the case.
Note that, with life insurance , in the event of an unforeseen event that prevents the client from continuing to respect the commitment signed with their bank, immediate family members or the guarantor will not be called upon to assume this responsibility.
In other words, in the event of death or disability, the policy is activated and the debt, or part of it, can be paid off. This way, it is possible to settle the missing amount without compromising your family’s security and financial stability.
Where to buy life insurance?
When applying for financing with your bank, the bank normally suggests taking out life insurance from the insurance company associated with it.
It is in the institution’s best interest to retain and retain each customer as much as possible. Therefore, this proposal is usually accompanied by a spread bonus . If the customer does not show interest in the proposal and wants to look for another solution, they will notice that their credit spread will increase.
It is important that you know that, in light of current legislation , the customer is not obliged to accept the life insurance offer from the bank that granted the mortgage loan . They have complete freedom to seek, among other insurers operating in the market, the solution that best meets their intentions.
What is the best solution?
As with any contract, the best solution is the one that meets the needs and preferences of each client. Before choosing, carry out a market analysis to understand whether the advantage granted by the bank is superior to the best offer you find.
Considering this step can help you save a lot of money in the long/medium term. Furthermore, you have the chance to choose the product and coverage that best adapts to your situation and that of your family.
If you already have life insurance associated with your mortgage loan, the law also allows you, at any time, to transfer the insurance to an entity that offers you a more appealing proposal.
Operating in the luxury segment , DS PRIVATE promotes a personalized and differentiating real estate consultancy service. We work towards the full satisfaction of our customers in several aspects, so that they can make informed decisions. If you want to know more about our area of activity in the real estate sector , visit the DS PRIVATE blog .
