Banks, providing a loan for the purchase of real estate, not only issue a pledge for it, but also require mortgage insurance. Buying a property insurance policy is a prerequisite for any mortgage agreement. What about other types of insurance?
Understanding What Mortgage Insurance Is
Mortgage insurance is a set of types of insurance that are designed to protect the financial interests of each participant in mortgage lending.
The need to conclude such agreements is due to the need:
- bank - in obtaining guarantees of loan repayment, which allows to reduce the interest rate and increase the loan term in relation to consumer loans;
- client - in obtaining financial security for the possibility of fulfilling their obligations in the event of death, disability, a decrease in income, and so on.
The main purpose of mortgage insurance is to redistribute risks among insurers, borrowers and lenders in order to increase the reliability of the mortgage insurance system.
Types of mortgage insurance:
- mortgage property insurance, which, according to the agreement, was pledged against the risks of loss or damage;
- personal, which is life and disability insurance of the client (borrower or co-borrower);
- Title deeds are insurance against loss of title to collateral as a result of loss of ownership.
As an additional option, insurers offer to insure the civil liability of the owner of the premises against:
- third parties during the operation of the property (for example, from cases of flooding of the neighbors' apartment);
- creditor for non-fulfillment of accepted financial obligations (in the event of a delay, if it is impossible to make payments in the future).
Features of this type of insurance
Mortgage risk insurance differs in that the lender (bank) is indicated as the beneficiary under the contract. In the event of an insured event, it is in his favor that the insurer will make an insurance payment. Its amount cannot simultaneously exceed either the amount of outstanding debt or the amount of damage suffered.
There is a scheme of payment of the sum insured at a time - immediately - at the conclusion of the contract for the entire term of the loan. The most common scheme is the annual payment of the sum insured.
Do I need to insure an apartment every year with a mortgage? Yes. This is stated in the loan agreement.
Legality of requirements for the conclusion of insurance contracts
Mortgage property insurance: mandatory or not - disputes have been going on for a long time, but there is a law, and there is judicial practice.
According to Federal Law No. 102-FZ “On Mortgage”, mortgage borrowers are required to insure the collateral. Nothing is said about other types of insurance in the document.
Mortgage personal insurance Art. 935 of the Civil Code of the Russian Federation is defined as voluntary. However, banks strongly recommend that their customers take out such insurance. It is optional, but its absence will lead to an increase in the loan rate, at least 1%.
A similar situation exists with respect to title insurance. The client has the right to refuse, but the loan, as more risky, from the point of view of the lender, will be offered to him on other, less favorable terms than those borrowers who agreed to fulfill the requirements of the bank.
Judicial practice in relation to such disputes indicates that in most cases the requirement to conclude a life and health insurance contract is recognized as an abuse of freedom of contract, since they refused to issue a loan without insurance.
According to the Instructions of the Central Bank of the Russian Federation of November 20, 2015 No. 3854-U, the borrower has the right to refuse the insurance product imposed on him within 5 days from the date of signing the relevant documents. The amount paid by him must be returned in full.
However, the Central Bank of the Russian Federation explained that if the borrower refuses this service, the lender has the right to change the terms of the standard agreement and increase the interest rate.
This clause is already included in most mortgage agreements. Also, lenders widely use their right to unilaterally terminate the mortgage agreement due to non-compliance by the client with its conditions. This provision is also spelled out in the loan documentation. The bank sends a notice to the client with the requirement to either take out insurance, or he terminates the contract. The latter means that the borrower is obliged to repay the entire amount of the loan, or legal proceedings await him.
The appeal of citizens (more often in the course of litigation) to the fact that the condition for the need for insurance violates their rights is not accepted: the agreement was concluded under certain circumstances, about which the client was warned in advance.
The signature under the documents means agreement with the fulfillment of the requirements established by them.
Typical insured events
Property insurance standardly assumes as an insured event:
- fire, including that which occurred outside the insured object;
- domestic gas explosion;
- disaster;
- flooding resulting from an accident in the water supply, sewerage or heating system, even if the water came from neighboring premises;
- illegal actions of third parties (hooliganism, robbery, vandalism);
- falling on real estate of aircraft (their parts);
- identification of structural defects in the structure, which were unknown to the insured at the time of the conclusion of the contract.
You need to be prepared for the fact that the minimum package offered by insurers provides for payments only when significant damage has been caused to the insured property.
For example, if the wallpaper was damaged as a result of the bay of the neighbors, there will be no payment, and if someone broke the window, then you can count on compensation for its value. The entire balance of the loan will be paid only when the object is completely destroyed. In the case of a private house, if the foundation remains, then only part of the debt will be repaid, because, from the point of view of the insurer, the rest of the building can still be used to build new housing.
To get more guarantees, more compensation, you should take out more extended insurance, but it will cost more.
The next type of mortgage insurance is life and health insurance of the borrower. Insured events under such an agreement are:
- the death of the insured due to an accident or illness that occurred during the term of the contract;
- disability as a result of illness or accident with the appointment of 1 or 2 disability groups.
What is title insurance for a mortgage is easier to understand from the list of insured events under such contracts:
- recognition of the sale and purchase as invalid (on the basis of paragraph 2 of Chapter 9 of the Civil Code of the Russian Federation);
- recovery from the buyer of housing (in whole or in part) by persons who have retained ownership of this object.
This type of insurance is designed to protect the rights of a bona fide purchaser. A court decision will confirm the occurrence of an insured event. Payments under such agreements should compensate the financial costs of the borrower and guarantee the repayment of the loan to the lender.
In such cases, the insurance company has the right to provide full legal support, including representation of the client's interests in court.
The problem of receiving insurance payments
The insurer has the right to refuse to pay insurance compensation in a number of cases. All of them are written in the insurance contract.
Personal insurance for mortgage lending involves the establishment of the borrower of the 2nd or 1st disability groups or his death as an insured event. In this case, the payment is made in full one time. In the first case, the property remains in the ownership of the borrower, in the second it will be included in the inheritance mass and the heirs will receive it without any encumbrance (without collateral or obligation to repay the loan debt). But for example, compensation under a life insurance contract will be denied if the death occurred as a result of suicide or a car accident caused by the insured. The indemnity will not be paid in cases where the client initially knew about health problems, confirmation of which the insurer finds in his medical documentation, but did not report this when concluding the contract.
There will also be problems with compensation for persons who have suffered from occupational risks, as well as for those whose blood at the time of the insured event is found to contain alcohol or drugs, the intake of which was not prescribed by a doctor. According to the law, the insurer in such a situation is not obliged to repay the debt.
If life and health insurance was issued in respect of both spouses-co-borrowers, then in the event of the death of one of them, the debt to the bank will be repaid only by half, i.e. 50% of the loan balance. If the insurance was made taking into account certain proportions, then the payment will be made taking into account how it was written in the contract. For example, in the event of the death of one of the spouses, the compensation may be 70% of the balance, while in the event of the death of the other - 30%.
In cases where there is no firm confidence that the refusal of the insurance company is correct, it is worth contacting a lawyer specializing in this area.
Already at the first consultation, having studied all the documentation, the specialist will be able to confirm or refute the legality of the insurer's actions and make an assumption about the advisability of protecting their interests in court.
How to save money on mortgage insurance
The insurance program offered by the lender's employees is, as a rule, a product that is unprofitable for borrowers. Most banks act as intermediaries between the true insured, the organization with which the contract is actually concluded, and which will subsequently, if necessary, make insurance payments, and the client. Accordingly, the lender most likely has a discount from the "supplier" and at the same time makes a surcharge to cover his own expenses.
As a result, an insurance contract concluded in a bank office may turn out to be 10-20% more expensive than an agreement drawn up on the same terms either with the insurer itself or with its other official partner.
If you decide to take out insurance directly from the insurer, check with the lender for a list of accredited companies. Although any restrictions on the choice of an insurance company are unacceptable according to the law, they can be established contrary to them. Therefore, it is wiser to check with the bank for a list of accredited insurers.
Considering that the sum insured is calculated based on the value of the loan balance plus interest that will be accrued over the next year, savings are possible due to early repayment of the loan.
The faster the mortgage debt is repaid, the less interest the borrower will pay, the less the sum insured.
You should also take into account the maturity date of the loan. Ideally, you need to adjust the term for the full repayment of the loan by the time the next insurance contract ends. If it didn’t work out, then by issuing an appropriate certificate from the creditor about the absence of debt, you can contact the insurer with a request to return part of the sum insured according to the actual time of existence of the credit obligation (debt to the bank).
How to properly insure yourself with a mortgage so as not to overpay. When determining the amount insured, insurers take into account:
- client's age. The policy will be cheaper for people who are 25-35 years old;
- the price of the property - the more expensive it is, the more you need to pay the insurer;
- with personal insurance, they may be asked to undergo a medical examination, as a result of which the cost of the policy will be determined. The fewer health problems a person has, the fewer bad habits he has, the greater the discount he will be given;
- The larger the loan amount, the larger the sum insured will be assigned for payment.
Summary
Mortgage insurance: mandatory or not? An insurance contract for mortgaged real estate is required. The rest - formally not, in fact, the bank indirectly (through worsening credit conditions or even refusing to conclude a mortgage agreement) forces customers to agree to this requirement.
From a financial point of view, sometimes it is a little more profitable to agree to an increase in the rate on a loan, but refuse additional insurance.
Interest is accrued regularly on the balance of the debt, which decreases as payments are received to repay the loan, i.e. monthly or even more frequently. When determining the sum insured, the amount fixed at the beginning of the year is taken into account.
A reasonable solution to this issue is to fulfill the requirement of the creditor, but conclude a mortgage insurance contract directly with the insurance company.
The benefit of the borrower with mortgage insurance lies in the fact that in the event of an insured event, although the bank will receive the payment, the citizen will be released (partially or completely) from obligations to pay the mortgage.
In difficult times, which are indicated in insurance as insured events (loss of property, disability, etc.), this can be very helpful.
Given the above, we can say that a mortgage is a risky project for the borrower and the insurer. The bank in the presence of a full package of insurances and the subject of collateral risks less.
The current insurance legislation establishes that the borrower must insure the collateral object, that is, the property itself, without fail. However, financial institutions, in order to minimize their own risks, prefer that the client take out life and health insurance with a mortgage, thereby forming the so-called legal purity of the purchased premises. Such loans are insured for the first 3 years of the relevant agreement until the expiration of the period for the possible contestation of the transaction. This is especially true of real estate, which is acquired by the borrower in the secondary housing market.
In the case of banks offering additional life insurance, there are practically no refusals from customers. For uninsured borrowers, banks only offer programs with deliberately high annual rates, but clients themselves understand that life can bring unpleasant surprises, and an apartment must be owned for at least the next decades.
What to do in the event of an insured event
In the event of such a case, the client of the bank must notify the financial institution itself of this fact. This is due to the fact that all insurance payments go to the bank, and the issue of their further payments is decided at the level of the organization and the participating insurance company.
Thirteenth insurance payment
Mortgage insurance provides for the payment of the so-called thirteenth installment. This amount is equal to the level of monthly interest payments in favor of the bank. The cost of insurance itself will decrease depending on the remaining term of the loan.
It is worth noting that it is rather difficult to predict the total amount of further insurance payments, because the acquired property is aging.
Where is mortgage insurance cheaper?
It should be noted right away that the high position of insurance companies in the official ratings does not reflect the full picture and does not serve as a guarantee of their viability. When choosing an insurance organization, its future client should find out about the availability of a current license for insurance activities and familiarize themselves with open financial reports.
You should also be especially careful about various preferential and discount programs. When choosing the most profitable insurance company, it is worth remembering that many organizations are partners only with certain banking structures.
Among the most attractive insurance companies it is worth highlighting the following:
Mortgage borrowers are the most preferred Sberbank and loan products of Alfa-Bank, Uralsib and VTB 24. Mortgage life insurance is a procedure that has different rates. However, the average percentages across the market do not differ much. The very procedure of such insurance is intended to protect the property interests of all participants in the loan agreement and is a kind of risk separator among all subjects of relations.
Key risks
The process of insuring mortgage loans is directly related to certain risks. Insurance within this framework is of the following types:
- property insurance against external influence, due to which its value can be automatically reduced;
- title insurance, which is to minimize the risk of loss of property rights;
When buying a home in a new house, you need to insure only life and health, since the borrower does not have direct property rights. In the past, banks also required financial risk insurance. But at the moment this practice is not applied. That is why it is quite difficult to buy an apartment on credit in a new house. This is due to the fact that funds are allocated only by those financial institutions that are directly involved in financing housing construction.
When buying a land plot, property insurance is also not provided. The only exception is the corresponding program of Sberbank.
Nuances of life and health insurance
For this kind of insurance, customers need to undergo a mandatory medical examination, but not all. Since insurance companies set an individual limit, a mandatory medical examination of persons who have taken out a mortgage is only necessary if a certain amount of the loan is exceeded.
Thus, for example, if a client takes out a mortgage in excess of 3,000,000 rubles, then he does not have to undergo an examination. As for the financial institutions themselves, in some cases, depending on the existence of an appropriate agreement with the insurance company, they themselves insist on a medical examination.
It is worth noting that the insurance company may immediately refuse to issue insurance to persons who have a fatal disease.
How much does a borrower spend on mortgage insurance
All costs under the mortgage agreement must be calculated based on the following main factors:
- life insurance must be carried out before obtaining the loan itself (where mortgage insurance is cheaper can be found in the paragraphs above);
- the collateral can only be insured when the borrower acquires the title to the property;
- if real estate is bought on the secondary market, then insurance occurs at the time of issuing a loan.
The corresponding payments must be made once a year, the amount is reduced in direct proportion to the remaining duration of the insurance contract. The total amount of insurance costs can reach 1.5% per year of the total amount at the time of payment. The cost of insurance services directly depends on the age, place of employment and the results of the medical examination of the client. That is why individual insurance conditions are offered in each case.
Is mortgage life insurance required?
In most cases, the procedure for such insurance is mandatory. The process of registration itself usually does not take much time for either the insurance company or the borrower, and in some cases all obligations can be transferred to the bank issuing the loan. The amount of insurance can be repaid with borrowed funds. Each borrower can, if desired, independently engage in such insurance, but in this case, you will have to collect the necessary documentation and pay the insurance premium on your own.
Health and life insurance will allow the bank's client to save his relatives from possible payments in the event of an insured event due to death or disability. That is why banks often oblige borrowers to perform such an operation, the insurance agency will be able to pay off the entire difference in costs.
It is worth noting that long-term cooperation with the insurance agency helps the client to receive certain benefits. To understand what percentage of mortgage insurance after registration of a mortgage agreement, you can consult with representatives of the company.
There is a question that worries potential borrowers, is life insurance mandatory for a mortgage at Sberbank in 2019? After all, such a clause is spelled out in a loan agreement for a mortgage with state support.
A preferential rate for a mortgage is valid only on the condition that the borrower necessarily insures his life and health. Otherwise, the bank has the right to increase the lending rate by 1%.
To insure or not to insure
First, let's figure out whether it is necessary to insure life at all in order to get a mortgage loan? After all, many banks insist on such insurance. Are their claims legal? Who needs it more: the bank or the borrower?
Personal insurance covers a whole group of risks:
- the death of the borrower;
- persistent health disorder and disability;
- injuries and acute illnesses;
- partial disability.
If the borrower has difficulty repaying the loan for one of the above reasons, the insurance company will pay off the resulting debt for him. These funds are received by the bank. But a credit institution can send part of the money to the borrower so that he pays for the treatment, returns to work as soon as possible and resumes payments.
Thus, insurance for the lender reduces the risk of non-payment of the debt. And the borrower is guaranteed that in the event of adverse circumstances, the burden of repaying the loan will not fall on his relatives. And even in case of loss of health or temporary loss of work, he will be able to pay off part of the debt with the help of insurance. Given that the loan is given for up to 30 years, the occurrence of an insured event does not seem to be something absolutely impossible.
What they say in Sberbank
In Sberbank managers also sometimes insist that life insurance is mandatory with a mortgage. But borrowers are often not concerned about the question itself, to insure or not to insure life. Indeed, in recent years, personal insurance is no longer perceived as something completely unnecessary. Especially when it makes it possible to obtain favorable conditions for a mortgage loan and reduce the lending rate.
Conflicts arise when Sberbank employees do not just impose life insurance, but insist that the policy be issued in the Sberbank Life Insurance company. And her annual rates are not the lowest:
- life and health insurance of the borrower – 1,99% ;
- life and health insurance in connection with involuntary loss of employment – 2,99% ;
- life and health insurance with independent choice of parameters – 2,5% .
Interest is calculated from the sum insured, and it is equal to the size of the loan. And the recipient of the loan will face significant payments.
How to behave with bank managers
The borrower has the right to insure his life and health in any insurance company accredited by Sberbank. This rule is spelled out as a separate clause in the loan agreement.
There are four such companies, in addition to Sberbank Insurance:
- LLC IC VTB Insurance;
- SAO "VSK";
- LLC ISK Euro-Polis;
- OAO SOGAZ.
Their rates are usually lower than the rates at Sberbank Insurance. But, despite the law, Sberbank managers sometimes insist on issuing a policy in their insurance company. It is difficult to say what drives them: simple incompetence or the desire to make money on additional services. But unfortunately, such precedents happen. In this case, the potential borrower needs to refer to the website of Sberbank of Russia. It says that you can insure health and life in any insurance company that meets the requirements of this credit institution.
If this does not help, then it is necessary to demand from the bank employees a written refusal to issue a loan with a mandatory indication of the motive. As a rule, such a step is enough to remove all the objections of managers and start a constructive dialogue. Otherwise, you need to contact the management of Sberbank directly or appeal against the unlawful refusal to issue a loan in court.
Video: About mortgage insurance
Summarize
When you take a loan for housing at Sberbank, it is not necessary to conclude a personal insurance contract. You have the right to refuse insurance. No law provides for its indispensable presence.
Voluntary health and life insurance when obtaining a mortgage loan has positive and negative sides. The biggest disadvantage is the total amount of insurance payments under the contract. Considering that contributions must be paid annually, the cost of life insurance with a mortgage at Sberbank is significant, credit programs are designed for 30 years, and an impressive overpayment is obtained.
But if we take into account that Sberbank in the absence of insurance increases the loan rate by 1%, then there is a reason to insure. It is not necessary to do this at Sberbank Insurance. It is reasonable to look for more favorable conditions from other insurers accredited in this credit institution.
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11 Comments
Make insurance in accredited companies! Much cheaper, they will scare you - don't be fooled. You can refuse electronic registration and you can also refuse to open an account, which costs 2000r, they rip off ordinary people like sticky bastards!
On November 5, 2016, a borrower of 2 million rubles died in production ... since 2007, half of the amount has been paid ... his wife (38 years old) is unemployed and two small children (3 and 10 years old) are not able to pay another 1 million ... for which hopefully what to do? the family found only a VTB policy for property insurance ... in contract No. 26740 there are also no lines about the life insurance policy ... How should I go to the President? my t.925-185-36-41
Good afternoon! Please tell me what to do if an employee of Sberbank, when applying for a mortgage loan, forces them to insure with them, and we want to go to another insurance, to which the employee says go insure, but refuses to provide a credit agreement number for the insurance?
For the majority of Russian residents, the housing problem can be solved only by resorting to bank lending. When taking out a loan, you will be required to insure the acquired property, which is pledged, as this is mandatory and regulated by law. In addition to this, banks always offer mortgage life insurance in a company accredited by them, in case the borrower has health problems. For this reason, many borrowers are interested in the main question: is it worth agreeing to purchase a policy and how much it will cost.
What is mortgage insurance
Since the main players in the lending market are banking structures, they often put forward their own terms of the game. This usually applies to insurance. Today, banks offer borrowers to purchase a comprehensive insurance policy, which includes:
- mortgaged property insurance. Acquired housing is subject to insurance for the entire period of the loan. This includes not only the building or apartment itself, but also the interior decoration. As for furnishings, they can also be insured, but a separate agreement is concluded for this.
- life and health insurance. If, for health reasons, the borrower cannot repay the debt to the bank, the insurance company will do it for him. Such cases include getting injuries that caused temporary disability or disability, serious illness and even death. Provided that a person had a serious illness at the stage of concluding a loan agreement and hid this circumstance, insurance will not be paid.
- title insurance. The bank can offer you this type of insurance, provided that the legal purity of the acquired property is questionable. The maximum term of the contract is 3 years, since according to the law, during this time all disputes on property rights lose their force.
Insurance allows the borrower to receive a tax deduction once a year.
What does mortgage life insurance provide?
It may seem that life and health insurance with a mortgage is beneficial only to the lender. However, this is not entirely true, since the policy protects the borrower if he cannot pay off his debts. In this case, all costs are covered by the insurance company. The insurance company can repay the debt in full, or do it monthly for the insured person. This happens when:
- a long period of disability (more than 30 days);
- received disability of 1 or 2 groups;
- death of the borrower.
Insurance company refusal to pay
The insurance company may provide a payment if the client hid the presence of serious diseases, which include HIV, AIDS, oncology. In addition, the SC will refuse under the following circumstances:
- the borrower was under the influence of alcohol or drugs;
- in case of suicide, with the exception of the case of bringing to it;
- if the borrower got into an accident without the right to drive a vehicle;
- when committing a crime, if it is proven by the court.
Features of recognition of an insured event
Having recognized the insured event, the insurer is obliged to reimburse the debt in full, but for this it is necessary to comply with all formalities. So, if a person is on sick leave for more than 30 days, he must apply to the UK with a statement. The debt will be repaid in proportion to each day of illness. Upon receipt of a disability, an application must be written no later than six months after the expiration of the insurance. In the event of the client's death, the borrower's family can apply at any time, but no later than one year from the fact of death.
Is life insurance required for a mortgage?
Purchasing a life insurance policy with a mortgage is not a prerequisite. The bank may offer its registration on a voluntary basis as an opportunity to protect itself and co-borrowers in the event of an insured event. Lack of insurance is not a reason to refuse a mortgage loan, although the majority of the population has this kind of stereotype.
Legal regulation
You will not find in any regulatory legal act a decree that the borrower must insure his own life when buying a home with the help of credit funds. Another thing is when it comes to real estate insurance. In this case, it is necessary to refer to the federal law "On Mortgage", in paragraph 31 of which it is written in black and white that this condition is mandatory.
Bank requirements
Based on the above information, it can be understood that banking organizations do not have the right to demand life insurance for a mortgage, and even more so arbitrarily include this item in a loan agreement. The lender can only offer to buy a policy, and it's up to you to decide whether to do it or not. Another thing is that if you refuse insurance, you will be offered completely different conditions for providing credit money.
How life insurance affects the cost of a mortgage
The first thing that can lead to a refusal to purchase a policy is an increase in the interest rate on a loan. The bank may also shorten the term of the loan or ask for more money as a down payment. If you think this is illegal, you are wrong. A credit organization gives you the right to choose: to purchase a policy and receive preferential credit terms or to take money on a general basis.
Sanctions of mortgage banks for refusal of insurance
Having found out whether it is mandatory to insure life with a mortgage, it is necessary to obtain information on how much interest banks can increase the annual rate. There is no single approach to this issue, therefore, it is necessary to find out this information from each creditor separately, because the corridor between the minimum and maximum values can reach several percentage points. Here are just a few examples of how the rate will change:
- Sberbank +1%;
- Bank of Moscow +1%;
- VTB24 +1%;
- Deltacredit +1%.
- Raiffeisenbank + 0.5%;
- Rosselkhozbank +3.5%;
In which banks life insurance for a mortgage is optional
If life insurance for a mortgage at Sberbank or VTB implies the mandatory purchase of a policy from the list of accredited companies, otherwise the terms of the loan will be changed, then in a number of banking institutions, when concluding a loan agreement, buying insurance is only your personal business. Mortgages without life insurance are offered in:
- Globexe;
- Gazprom and others.
How to draw up a life insurance contract
If you have a life insurance policy, this does not mean that you can provide it, because in an insurance situation, you or your relatives will receive the money, but not the bank. For this reason, you will have to sign a new contract, where the beneficiary is the lender. You can do this in:
- insurance company;
- bank.
The insurance will take effect from the moment the first installment is paid.
At the bank when concluding a mortgage agreement
When buying a voluntary life and health insurance policy with a mortgage at a bank, you will be asked to conclude an agreement with a particular company, so immediately ask to clarify whether it is possible to choose another company, because then insurance may cost less. This is due to the fact that the insurer pays the bank a certain percentage of remuneration for each concluded policy. The insurance company includes this money in the cost of the contract.
In an insurance company accredited by the bank
Not all banks accept mortgage life insurance from any company, so be prepared to collect additional paperwork that the lender needs to accept this policy from you. For the borrower, an independent choice of a company is beneficial in that he can apply to the one with which he has established long-term contact. In this situation, he can receive an additional discount.
You should not give preference to little-known organizations that, in order to attract customers, can offer very profitable options - it is better to insure yourself with a reliable partner. This is due to the fact that a mortgage is issued not for one year, but for a long period, and the company's work experience in the market is an indicator of its reliability, because many newcomers can burn out in the next year or two.
Documents for registration of an insurance policy
In order to conclude a personal insurance contract, you do not need many documents. Sometimes additional papers may be requested, but, as a rule, the list is limited to the following:
- passport;
- A completed application form;
- mortgage lending agreement;
- medical certificate.
The questionnaire can be filled out directly on the spot. It contains basic data about the client, place of residence and type of loan. The mandatory medical certificate provided must contain all seals and signatures, as well as information about the state of health and examinations carried out.
Contract time
Traditionally, mortgage life insurance is issued for a period of one year, so it must be renewed each time. Otherwise, the bank has the right to charge penalties from the borrower. Lenders do not always require their customers to renew their policy. This helps to further save money, because some insurers have a remuneration amount that can reach several percent of the amount owed.
Mortgage life insurance cost
The cost of the policy directly depends on which organization you purchase it from and on the balance of the debt, therefore, each time you enter into a new life and health insurance contract with a mortgage, the amount will be less than the previous one. If the policy was purchased at the office of the insurance company, it will be necessary to take a certificate of the balance of the debt in order to correctly calculate the amount of the fee.
If you do not know which company to choose, you can use the online calculator to help you navigate the existing offers. It cannot be said that he will give the exact price, since the final calculation will be made by an employee of the insurance company, but he will help you find out where there are more favorable and flexible conditions for purchasing insurance.
What factors are taken into account when calculating the insurance premium
When choosing life insurance for a mortgage, you need to understand that the amount of the installment will vary for different clients. This is due to many factors that insurers pay attention to when applying decreasing or increasing coefficients:
- age. Older people will have to pay more, since the risk of illness or death is higher than that of younger borrowers.
- floor. It doesn't really matter, but the tariff for men may be higher because they have a shorter life expectancy than women. On the other hand, a woman may go on maternity leave and the UK will have to repay the debt. For this reason, this position depends directly on the insurer and its policies.
- health status. If a person, as the extract shows, does not have serious diseases and does not belong to a risk group for health reasons, then the insurance premium for him will be reduced.
- profession and lifestyle. People employed in harmful and difficult working conditions, according to statistics, live less. This is also taken into account by insurance companies when issuing a policy with a multiplying coefficient.
- mortgage loan amount. The higher the amount of debt, the more insurance will cost, since they are calculated from the amount of the loan, and do not have a strictly established amount.
Insurance company rates
To summarize, you can understand that the exact mortgage life insurance rate is calculated on an individual basis, and many factors fall on it - from age and gender to health and lifestyle. However, in each case, insurers have a base value, expressed as a percentage. It is repelled from it when making calculations. Each organization is different:
| Sberbank | |
| VTB Insurance | |
| RESO-Garantia | |
| Ingosstrakh | Since mortgage life insurance implies that the lender is the beneficiary, the funds will be transferred to him directly, bypassing you. Documents for reimbursementFor an insurance company, upon the occurrence of an insured event, it will be necessary to prepare a number of documents that will serve as the basis for debt reimbursement:
Recalculation in case of early partial repayment of the loanIn case of partial early repayment, you have the right to demand that the insurance company recalculate the amount of the contribution, and in case of overpayment, return part of it. To do this, you will have to bring a certificate from the bank on the balance of the debt and a schedule for calculating monthly payments, which is issued upon signing the loan agreement. Here, too, it is necessary to read the terms of the mortgage life insurance contract, since in some organizations this can be done only a few times during the period of the policy, or such an opportunity is not provided at all. Return of the insurance premium upon full early repayment of the mortgageTermination of a life insurance contract is possible with a full return to the bank of the debt. In some cases, the UK does not pay the balance, but this is written in the contract. If such a possibility exists, it is necessary to write an application addressed to the head of the insurer company with a request to return an amount equal to the amount of insurance payments for unused time. In addition, you must attach a certificate indicating that there are no financial obligations to the bank for a mortgage. Money is transferred by bank transfer to the account you specified. Video
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