How long is mortgage protection insurance?

What does mortgage insurance cover?

The amortization insurance of a mortgage loan is a life insurance that covers the holder of the contract in the event of death or disability on all or part of the capital owed on the mortgage, depending on the percentage that we have insured. This can range from 50-100%. Thanks to this policy, family members will not have to continue paying the mortgage in the event of the loss of income due to the death of the head of the family.

It is important to underline that it is not a compulsory insurance. However, banks are usually insistent with their clients to contract this type of insurance at the same time as the mortgage, encouraging them with the prospect of benefiting from great advantages by linking this insurance to their mortgage.

However, nothing obliges you to contract this insurance with the same bank, as we have already mentioned. This is dictated by the new Law 5/2019, of March 15, regulating real estate credit contracts, which came into force in June 2019:

How much will my mortgage increase if I remove the life insurance?

In the event of cancelling the life insurance, the differential will increase by 0.05%, remaining at 0.65%. The same applies to home insurance.

What is mortgage payment protection insurance?

A payment protection insurance is a policy that basically serves to meet the payment of the installments of a mortgage loan when the holder of the same is faced with one of these two situations: Unemployment situation: as long as you are an employee with an indefinite contract.

What does loan insurance cover?

The amortization insurance of a mortgage loan is a life insurance that covers the holder of the contract in the event of death or disability on all or part of the capital owed on the mortgage, depending on the percentage that we have insured. This can range from 50-100%.

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Mortgage loan insurance cost

A payment protection insurance is a policy that basically serves to meet the payment of the installments of a mortgage loan when the holder of the same is faced with one of these two situations:

It is important to clarify that the unemployment or temporary disability coverages are alternatives, so the policyholder will only be able to make effective use of one of these two options. In addition, all the conditions will be correctly established in the policy and will also depend on the insured’s employment situation at the time of the loss.

When an accident occurs, a temporary disability is declared or the insured officially becomes unemployed, the insurance company will pay the outstanding installments to the mortgage loan creditor credit institution, always within the limits and conditions initially contracted in the policy.

In the case of unemployment: the payment protection insurance will take over, for 24 months, the payment of the loan installments, as long as you are an employee and your contract is indefinite.

What is mortgage-linked home insurance?

What is mortgage-linked home insurance? Mortgage-linked home insurance is insurance that covers the structure of the home, although there are also home insurance policies that cover what is inside the home.

How much is one point on the mortgage?

In the 20-year term, each point means €70 more per month and €20,000 more paid in total. For 30 years, each point means €80 more per month and €30,000 more paid in total. For 40 year-olds, each point means €90 more per month and €40,000 more paid in total.

How much is payment protection insurance worth?

The premium for this insurance varies between 1% and 1.5% of the loan amount. In spite of the interest it generates, the truth is that it is an insurance that can have a high cost. In the case of mortgages, the price of the insurance ranges between 1% and 1.5% of the total amount of the loan.

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Life insurance is mandatory in a mortgage

To find out whether or not a life insurance with the mortgage suits you, first of all you will have to do the math and calculate the fee you would pay if you contract this product with the bank or, on the contrary, if you decide to subscribe it independently.

However, the annual premium for Bankinter’s life insurance is 164.29 euros, that is, about 93 euros more than the cheapest life insurance on the market for this assumption (70.73 euros). In fact, the life insurance with mortgage is 100.89% more expensive than the average of the top 3 cheapest life insurance you will find on the market:

That is, if your base interest rate is 2.60%, you will be able to lower it by 0.6 points by taking out a policy of this type. In addition, if you agree to take out all the links offered by the bank (which may include direct deposit of your salary, taking out home insurance or a pension plan), you could reduce it by up to 1.30%. On the other hand, if you choose to take out all the linked products except the life insurance policy, the interest rate will remain at 1.90%.

What is protection insurance?

Description. Insurance that covers you in case of Death, Accidental Death, Accidental Disability and Serious Illness. In the event of the insured’s death as a result of an accident, the beneficiary may receive up to UF6 …. Indemnity compatible with any other insurance that the insured has in force.

What is payment insurance?

Payment protection insurance for loans is a contract between an insurance company and a client (loan holder) whereby the company takes over the loan installments if the loan holder becomes unable to pay them or his ability to pay is reduced.

How is life insurance on a loan calculated?

The value of the debtor life insurance premium is charged in the monthly installment of the loan and is calculated by applying a percentage to the value of the outstanding balance of the debt (principal + interest + insurance + other charges such as commission from the National Guarantee Fund, fees, etc.).

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Mortgage life insurance

Taking out a mortgage life insurance policy is as advisable as insuring the house you live in or the car you drive. In the event of the death of the policyholder, a mortgage life insurance policy would guarantee a premium with which to pay off the mortgage and ensure the financial stability of the household. In addition, many banks now offer interest rate reductions when you take out life insurance or other products.

One of the reasons for taking out a life insurance policy is to protect the family from possible future eventualities that may occur, especially when you have taken out a mortgage for the family home. In the specific case of mortgage life insurance, its scope of action is closely linked to the term of the mortgage.

Although taking out a life insurance policy is not compulsory, as it is in the case of civil liability car insurance, let alone linking it to the mortgage loan, having it can become a lifesaver in the event of the death of one of the spouses or of the direct subscriber of the mortgage. Undoubtedly, it is one of the most convenient types of life insurance to analyze.