Is mortgage life insurance mandatory or not?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In our time of great political and economic upheavals, everyone is trying to protect themselves and their capital. Banking institutions are no exception. This is especially true for long-term loans and the risks associated with them. One way to save bank investments is insurance. Long-term loans, in particular housing loans, are characterized by such a way of dealing with risks as mortgage life insurance.

Arguments for concluding insurance contracts

There is no 100% need for this product at the stage of concluding a mortgage agreement, but any bank is very negative about such conclusions, so the chances of a client getting a positive result without insurance tend to zero. This position is due not to an attempt by the bank to squeeze the maximum amount of money out of the client, but an attempt to protect investments. Since high mortality and negative social processes multiply the risks of bad loans.

Therefore, a life insurance contract, albeit behind the scenes, is a necessary condition for obtaining a positive result in relation to the mortgage. The form and content of the contract can be strikinglydiffer depending on the selected or recommended insurance campaign.

Need for life insurance for bank customers

As a rule, a life insurance contract is concluded not with a bank, but with companies aimed at working with the risk of non-repayment of borrowed funds. Therefore, banks often enter into agreements on mutually beneficial terms and refer their clients to specific companies. The need for such a relationship is due to the following:

- in the event of an insured event related to he alth, the insurer pays for the client;

- in the event of the death of the borrower, there is no need to wait until the relatives enter the right of ownership;

- in case of loss of the client's solvency, there is the possibility of a six-month delay.

Therefore, mortgage life insurance is one of the indispensable conditions when concluding a loan agreement.

Covering the risks of non-recovery of borrowed funds by Russian banks

Many Russian banks, taking into account the extremely unstable economic situation, have introduced into their charter a number of provisions regulating the procedure and conditions for issuing long-term loans. The social research inquiry "Mortgage, bank conditions" showed that most of the modern banks have made a constant to obtain a positive result.

In connection with this provision, banks are forced to create their own insurance structural units or enter into contracts with already proveninsurance companies. Naturally, having incurred these costs, banks raise interest rates on long-term loans for their customers.

Mortgage insurance at Sberbank

Sberbank of the Russian Federation is the largest institution in the Russian financial services market. Accordingly, this organization can offer the most convenient conditions for obtaining a mortgage. Mortgage life insurance is a positive factor for a positive decision of the client's request.

In long-term credit relationships there is always a risk of unaccounted for or force majeure. Therefore, there was a forced need to create such an instrument as "Sberbank: mortgage, life insurance." This tool has a positive effect on the number of satisfactory applications from residents of the country who want to get a mortgage. In case of refusal, Sberbank reserves the right to raise and revise the interest rate of the loan. Given the minimum loan amounts, this percentage significantly affects the final cost of the loan object.

Current conditions for long-term lending by Sberbank

Taking into account fluctuations in the foreign exchange market, Sberbank sets base rates on loans for a long period. For example, at the moment the current rate is 14.5%, it is valid until 2015-28-02. If the client refuses to use the services of the Sberbank: Mortgage, Life Insurance instrument, the rate for him rises to 15.5%.

But, despite all the nuances, Sberbank occupies the dominantposition in the long-term loan market. Many clients mistakenly believe that if a mortgage is taken (Sberbank), life insurance is mandatory. These statements are not true, since Sberbank does not violate federal laws, which specifically express the right to “optional life insurance when receiving long-term loans.”

Mortgage insurance at VTB

One of the most attractive banks on the long-term loan market is VTB.

To minimize or eliminate possible risks, this institution has introduced certain types of insurance obligations, depending on the term, type and amount of the loan. A potential client, before choosing the type of loan and applying to an employee of the institution, is obliged to familiarize himself with the following document “Mortgage: bank conditions” in order to feel the difference and choose the best form of application for himself. This document makes it possible to see all the benefits of a VTB mortgage, and also introduces a potential client to the VTB: Insurance system.

Features of VTB mortgage

VTB specialists have developed a long-term loan insurance system that includes the following products:

- the impossibility of mandatory contributions due to the loss of the borrower's ability to work;

- impossibility of mandatory contributions due to the death of the borrower;

- impossibility of mandatory contributions due to damage or loss of collateral;

- the impossibility of mandatory contributions due to the restriction or termination of ownership of the pledged object (infor three years).

Without concluding an agreement with VTB "Ipoteka: life insurance" by the borrower, the purpose of the loan becomes practically unattainable. In order to make this product as profitable as possible, VTB offers comprehensive insurance that includes the following risks:

- fire;

- natural disasters;

- consequences of a lightning strike;

- consequences of the explosion of domestic gas;

- consequences of water damage;

- consequences of falling flying objects;

- consequences of illegal actions.

When providing evidence of any of these conditions, the program provides for compensation for losses in the full real amount. If the compensation exceeds the outstanding obligations, the difference is paid to the borrower.

Mortgage life insurance cost

The cost of life insurance for a mortgage depends on many factors, but, as a rule, does not exceed one and a half percent of the final cost of the loan object. Value formation is influenced by:

- gender (since women live longer than men, the interest rate for them is lower than for men);

- age category (limit age from twenty to seventy years, for the military - up to 45);

- the state of he alth of the borrower (hereditary and chronic diseases can become an insurmountable barrier in obtaining a mortgage);

- risk of occupational injuries depending on the type of activity;

- hobby (hobbies dangeroussports have a negative impact on the interest rate).

In modern realities, mortgage life insurance is becoming one of the most important factors in relations between banking institutions, insurance companies and customers who want to receive long-term loans on individual and mutually beneficial terms. Therefore, if a mortgage is issued, life insurance is mandatory. After all, it is beneficial not only for banks, but also for borrowers.