Life insurance for a mortgage
Mortgage-linked life insurance is a requirement that is advisable to apply for when buying a home
Buying a home is a decision in which we a great deal of time and money is invested. In the vast majority of cases, you have to go to a bank and apply for a loan to enable you to buy the property. In order to be covered against any incidents involving default on the debt, banking institutions request, or directly include in the mortgage, life insurance linked to the mortgage.
What is life insurance for mortgages?
This type of life insurance for mortgages, is not compulsory, although it is highly advisable to have them to prevent the debt of the home payment from being passed on to heirs in the event of death.
As you will have noted, mortgage-linked life insurance works differently to other life insurance policies. In these cases, the beneficiaries in the event of the policyholder's death are banking institutions. In view of this, taking out life insurance for a mortgage seems like a good idea, as this means that the burden of returning the amount loaned to the bank disappears.
We are all aware of issues that may arise when dealing with debts passed on to heirs in the event of an unexpected death of a person. In many cases the debt incurred carries serious economic problems and puts those who acquire the obligation to pay the debt in an extremely complicated situation.
Is it compulsory to take out life insurance for mortgages?
As we have previously stated, it is not compulsory to take out life insurance for a mortgage with the same bank with which we have entered into the mortgage.
In many cases, banks offer payment facilities or better credit conditions to those who, in turn, take out life insurance for mortgages with them. This is very common when contracting services with a bank, and they are usually accompanied by other services such as contracting credit cards or other types of insurance, such as home or car insurance, etc.
Mortgage-linked life insurance offered by banks is not usually the best option. The price of these life insurance policies is higher than the options offered by insurance companies specialised in this type of service, thus, it is advisable to compare the offering of insurance policies on the market.
For this search, you can use tools such as insurance comparison services that save time and let you compare several offers at once and obtain the results at a glance.
In this type of life insurance for mortgages, in case of death, the beneficiaries are the banks that recover the value of the property.
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