The borrower must be prepared for the fact that in addition to interest and bank commissions, he will also need to pay the cost of insurance.
Moreover, in addition to the mandatory real estate policy, which is purchased by the client, it most often must also take out a life and health insurance policy. It is worth finding out whether this procedure is mandatory for a mortgage and how it is carried out in practice.
By law, the mortgage recipient is not required to purchase a health and life insurance policy when completing this transaction.
This insurance is more necessary for the bank, since it is one of the ways to minimize its risks in the event of death or an accident with the borrower. For mortgage lending, this is especially important, because the transaction is concluded for a large amount and for a long period.
However, although the bank cannot oblige the client to buy this policy if he does not 
wants, there are still legal ways to influence him. The most common of these is an increase in the interest rate for the client in case of refusal of insurance.
For example, the annual cost of a loan can increase by 0.5 to 1.5%, depending on the specific bank and mortgage program. In this case, the overpayment is almost equal to the cost of the policy, so it is easier for the client to take out this policy, because financially he does not lose anything.
Another way is to refuse to issue a loan to those clients who do not want to take out a policy. Since the bank has the right to independently decide on the issuance, it can refuse this to the borrower if he does not meet any of its requirements.
Therefore, most often, mortgage borrowers still have to take out insurance. However, this also has advantages for them, because in the event of an accident or death, they will be sure that their debt will be reimbursed by the insurance company.
Otherwise, debt obligations may pass to the heirs: spouses, children, parents, etc.
Cost and calculation of insurance
Most often, the policy is issued comprehensively, for all types of risks - that is, for the mortgaged object itself, for the title and for the life and health of the borrower.
This method allows you to get insurance much cheaper than in the case of individual registration of each.
There is no fixed cost of an insurance policy, since it largely depends on the conditions of a particular bank and the characteristics of the borrower himself. In particular, the factors that influence this are:
- Features of the mortgaged object (i.e. apartment or). For example, the cost of the policy may increase significantly if the home is located in a dangerous area. Title insurance (that is, ownership rights) will also cost more if the property is purchased on the secondary market.
- Borrower characteristics. In particular, his age and field of activity are taken into account. For example, for a young office employee the cost may be minimal, but for a construction or manufacturing worker it can be significantly higher. This is due to the fact that the insurance company seeks to compensate for possible risks.
The cost of insurance is tied to the loan amount and is set in the form of an interest rate.
Most often it ranges from 0.5 to 1.5% of the entire mortgage amount annually.
Receiving compensation in case of an insured event
Upon the occurrence of an insured event, the client (in the event of his death - the heir or 
) must contact the insurance company and provide copies of supporting documents. This could be medical certificates, doctors' reports or a death certificate. It is also worth informing the bank about possible payment delays and their reason.
After receiving the documents, the insurance company examines them and makes a conclusion about whether an insured event occurred, and also determines the amount of compensation due to the client.
It is possible that the amount issued will not be enough to pay off the debt - in this case, part of the funds will have to be repaid by the borrower himself.
If the insurance company refuses to pay compensation at all, it is worth informing the bank about this. Since the lender has a direct interest in the recovery of funds, it may conduct its own investigation. There are often cases when after this the policyholder is still forced to pay compensation.
Pitfalls when taking out insurance
The main risk that a borrower bears when signing a life insurance policy is the inclusion in the contract of provisions that are disadvantageous to him. For example, many companies indicate that if the client has chronic diseases, HIV infection or hepatitis, insurance payment will not be made. The list of such restrictions may be more extensive.
As a result, it may turn out that obtaining compensation in practice is generally impossible.
Such a policy is beneficial only to the policyholder and is of no value to the client or bank. Therefore, it is the interested parties who must control the contents of the contract with the insurance company and, if necessary, insist on changing its terms.
Is it possible to refuse?
In some cases, the borrower may cancel the life insurance contract during the term of the loan agreement (usually its term is renewed annually). However, in this case, he must be prepared for the fact that the bank may demand immediate and full repayment of the remaining amount of the debt.
In addition to refusal, the borrower can change the insurance company by concluding an agreement with another policyholder. But even in this case, the bank must be informed, without whose consent this is impossible.
It is worth considering that banks do not accept policies from all companies - it must be large and be able to reimburse a significant amount of funds for its client.
In any case, specific conditions regarding a change in the policyholder or a complete cancellation of the policy are contained in the loan agreement. Therefore, at the time of signing the document, all these issues must be studied and agreed upon.
Conditions for insurance from banks
Almost all large banks that issue mortgage loans have agreements concluded with insurance companies on issuing their policies to clients. You can consider the conditions of these policies using the example of market leaders:
Sberbank
Cooperates with several insurance companies and gives the client the right to choose any of them. In this case, the insurance risks are:
- death of the borrower (as a result of illness or accident);
- loss of ability to work and assignment of I-II disability groups.
The insurance rate depends on certain conditions that the client can determine himself, and ranges from 1.99 to 2.99% of the amount of loan funds issued. The maximum amount of liability that the insurance company bears is equal to the balance of the client's debt at the time of the insured event.
VTB 24
Issues a comprehensive insurance policy, which, among other things, 
includes risks regarding the life and health of the borrower. This lender's insured events are the same as in Sberbank. The cost of all comprehensive insurance is, on average, 1% of the loan amount for one year of the transaction.
For most borrowers, life insurance is an unnecessary service that is imposed by the bank and only requires additional expenses. However, in some cases, its presence allows you to obtain funds to fulfill your debt obligations, as well as relieve heirs or co-borrowers from the need to repay someone else’s loan.
Having taken out a mortgage on an apartment, the borrower must be aware that over the course of 15-20 years he will have to pay certain amounts to the bank. And the loss of work, health and other circumstances that may lead to insolvency will not matter.
Many people perceive the insurance that the bank requires as an increase in the cost of the loan, without thinking about what it actually is protection. And not so much the interests of the bank, but the borrower himself.
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What is mortgage insurance?
When issuing a long-term loan for the purchase of real estate against its collateral (mortgage), banks require this property to be insured.
Moreover, not only the collateral itself.
In order to minimize its own risks, the bank expresses a wish to insure life and health, as well as the risk of loss of ownership of the pledged property (title insurance).
At the time of the birth of mortgage lending in our country, insurers developed complex product, which included: property insurance (which includes title insurance) and life insurance.
Insurance companies now offer comprehensive mortgage insurance, which includes all three types of insurance required by banks.
The property is insured against all risks, including from a terrorist act, which in a regular contract is not included in the list of insured events.
Apartment mortgage insurance does not apply to the insured's household property unless he has included it voluntarily.
Life insurance includes the risk of death from any cause and disability of groups 1 and 2 as a result of an accident.
Some companies include the risk of temporary partial disability.
The title provides insurance for loss of property rights as a result of various encumbrances (unaccounted heirs, incapacity of the former owner, seizure of property, etc.)
Title insurance applies only to secondary homes.
What is required to be insured?
Article 31 of the Federal Law “On Mortgages (Pledge of Real Estate)” obliges the borrower to insure the pledged property.
And it's all.
Only insurance of the mortgaged apartment is mandatory for a mortgage. By law, the bank cannot require life and health insurance for the borrower and co-borrower, if any. So does title insurance.
Contract time
The property must be insured for the entire loan term. Life and health, as a rule, are insured for the same period.
Title insurance is issued for three years - this is the statute of limitations for property rights.
Sum insured
The insured amount is equal to the loan amount increased by 10%.
If the loan is issued in the amount of 1,000,000 rubles, then the insured amount will be equal to 1,100,000.
The borrower can take out insurance for the loan amount or for the full cost of the apartment.
The bank will claim to pay only that part that is equal to the mortgage debt. The rest will be received by the policyholder upon the occurrence of an insured event.
As the loan is repaid, the insured amount will decrease.
The disadvantage of incomplete insurance (when the insured amount is less than the actual value of the home) is that this amount may not be enough to cover the damage.
If you want to find out where and how you can get a mortgage with government support, we advise you to read.
When concluding an agreement, a schedule for payment of insurance premiums is drawn up, which is subject to agreement with the bank. Payment is made once a year, on the date indicated in the schedule.
Failure to pay the fee will result in the contract being terminated for the duration of the delay. The policyholder has the right to apply to the insurer to postpone the payment of the next premium. An additional agreement is drawn up and the bank is notified about it.
The first installment can be paid in installments, but only with the written permission of the bank. Banks provide this opportunity in exceptional cases.
As the sum insured decreases, the annual insurance fee also decreases..
The average tariff rate for property insurance starts from 0.1%, for life insurance from 0.15%, and for title from 0.2%.
What influences the tariff?
The rate for title insurance depends on how many transactions with the apartment were made for its purchase and sale. If the apartment belonged to only one owner, the tariff may be equal to the base rate.
The insurance company independently sets the cost of life insurance for the mortgage.
The life insurance rate for a mortgage depends on age, profession, hobbies and health status.
In the medical questionnaire, the policyholder needs to answer a number of questions regarding his state of health and lifestyle (bad habits).
For men the basic tariff rate is higher than for women.
The rate will change over the years - the older the insured person, the higher the rate.
The first question in the questionnaire is the height and weight of the person being accepted for insurance. If the ratio is violated (high weight with short stature, or vice versa, too low weight), the tariff will be increased.
Moreover, the insurer has the right to require a medical examination. Each company has a list of diseases for which it does not accept insurance.
False information provided in the form will result in refusal to pay insurance coverage and termination of the insurance contract.
Insurance payment
In property insurance, payment can be made only by agreement with the bank.
The actions of the policyholder do not differ from the standard ones prescribed in the rules. Before deciding on payment and its amount, the insurance company coordinates this issue with the bank.
According to the law, only the owner or a person who has an insurable interest can be a beneficiary (Chapter 48, Article 930 of the Civil Code of the Russian Federation).
In our case, in terms of debt, the bank becomes the beneficiary of the loan, but only in case of total damage.
If the damage is partial, the owner of the apartment will receive payment. These conditions must be specified in the policy.
Recalculation in case of early partial repayment of the loan
Often taken with the participation of maternity capital. With its help, part of the loan is repaid.
Accordingly, the loan amount is reduced and on the date of the next payment, the payment schedule for insurance premiums must be revised.
A new loan repayment schedule is submitted to the insurance company, on the basis of which a recalculation is made.
If there are several such early repayments throughout the entire mortgage loan insurance period, you need to contact the insurer each time
Who needs insurance and why?
The bank tries to protect itself from the risk of loan non-repayment.
A borrower who finds himself in credit bondage for a long period cannot foresee all possible adverse events.
In the event of his death, the obligation to repay the loan will fall on his heirs.
When concluding an insurance contract, the insurance company will repay the loan.
In the secondary housing market, having been in transactions several times, there is a risk of losing it as a result of various encumbrances.
Insufficient verification of the purity of the transaction can overnight deprive of housing, for which you still have to pay and pay the bank.
For a small fee (compared to potential losses), you can protect yourself from all possible risks associated with loss of property, life and health.
Choosing an insurance company
Now there is no such thing as accreditation of an insurance company with banks, but there is a list of requirements for them.
Usually, the bank “unobtrusively” offers a list of insurance companies with which it cooperates. The secret is simple - the bank, as an agent, receives a commission for each insurance contract concluded.
If the borrower has a valid life insurance contract, the bank, when issuing a mortgage, does not have the right to require another one from “its” insurance company.
You can find a bank where such a policy will be accepted unquestioningly. In this case, it is necessary to draw up an additional agreement with the insurer on introducing a new beneficiary into the contract - the bank - in terms of the loan debt.
Is it possible to refuse insurance?
The law is the law, and the bank takes good care of its interests. Therefore, insurance is “imposed” on the borrower on a voluntary-compulsory basis. You can refuse optional types, but is it worth it?
If the borrower refuses life insurance, the bank has the right to refuse to issue a loan without giving reasons or to increase the interest rate on the loan. On average, in this case you will have to overpay 2% per year for a loan.
Choosing an insurance company. Types of mortgage insurance. We invite you to watch the video.
Life and health insurance for a mortgage makes it possible to reduce the interest rate on a target loan, but the condition is not included in the list of mandatory requirements for receiving funds. The client, by approving the execution of the insurance contract, agrees to additional expenses, since the mechanism of the procedure is based on covering a certain premium. Banking organizations recommend fairly extensive lists of companies with which the borrower can enter into an agreement. Insurers' offers vary significantly in terms of the cost of the service.
What is the essence of health and life insurance on a mortgage?
When drawing up an agreement to obtain a loan for the purchase of housing, an employee of a financial institution will certainly offer the client to insure his own health and life. The service is included in the mortgage programs of almost every bank.
An uninformed citizen will begin to ask questions - what is insurance, is it really necessary, how much will the contract cost and what benefit will he receive from it. Of course, the expert will immediately begin talking about the benefits of the product and in every possible way convince the borrower to accept the offer and use the service. And this is where we need to figure it out.
First of all, it is necessary to clarify that taking out this type of insurance is not mandatory. In general, mortgage insurance is aimed at 3 objects:
- purchased real estate;
- health and life;
- title (ownership of an object).
Without apartment insurance, a banking organization will reject an application for a mortgage, but the client has the right to refuse other types of services.
If we talk about the essence of life and health insurance for mortgage lending, the point is to guarantee that the bank will receive funds provided to the borrower in the event that the borrower temporarily or permanently loses the ability to fulfill contractual obligations. In other words, he will not be able to deposit money according to the established schedule.
According to the terms of the insurance, the reasons for providing the bank with the missing amount of the loan are:
- loss of legal capacity by the borrower for a period of more than 30 days (injuries, serious illness, etc.);
- assignment of disability groups 1, 2;
- death of the borrower.
When an insured event occurs, depending on the specific situation, the company undertakes to temporarily pay the mortgage or pay the entire amount remaining at the moment.
When taking out insurance, there is a certain benefit for the borrower - if something happens, the insurer will pay the loan, and the apartment will remain untouched (will not be confiscated for non-payment of the debt). In addition, the client's mortgage health and life insurance may affect the interest rate on the loan. In most credit institutions, if a citizen agrees to insurance, its value is reduced by 1%.
However, the benefit for the bank is also obvious - the financial structure protects its own interests and, in the event of unforeseen circumstances, one way or another, receives back the previously issued funds. That is why mortgage specialists often impose and force the borrower to insure the risks of non-payment of the loan for reasons related to the physical condition of the person.
Clients, in turn, should understand that insurance will require significant contributions, which will significantly increase the burden on the borrower’s budget. Payment will have to be made annually at the time of extending the contract for another 12 months, although if desired, the client can refuse the next extension procedure.
In addition, some organizations are likely to refuse to issue a targeted loan if the applicant is categorically against additional services. However, this factor will not be indicated as a justification, since the regulations of credit institutions do not define life insurance as a mandatory requirement for a mortgage.
The obviousness of the high cost of the insurance contract regarding the life and health of the borrower is not in doubt. For a clearer understanding, clients should know what affects the final amount of insurance and how the amount is determined.
Most often, the cost of the policy is calculated at a standard rate and does not exceed 1% of the size of the target loan at a particular time. Since the contribution is made annually, its value will decrease over time.
The cost of insurance services may be influenced by the following factors:
- Age - the older the client, the higher the tariff rate.
- Gender. For female representatives, the insurance rate may be reduced. This is explained by the fact that men are many times more likely to work in hazardous industries. Their life expectancy is somewhat shorter than that of women, according to statistics.
- Weight category. For borrowers with increased weight indicators, increased life insurance rates are provided. In some cases, they may not be able to provide services at all. A high degree of risk of disability plays a role here.
- Field of activity. Professions with an increased risk factor will entail an increase in tariff rates.
- Hobby. Passion for extreme sports will increase the cost of the insurance contract.
- Health status. The presence of chronic diseases and other pathologies will play a role in increasing the total amount.
- Loan size and price of the property. The higher the above indicators, the higher the cost of insurance.
- A history of relationships with the insurer, for example, a bonus for transferring from another office or personal discounts will help reduce the insurance amount.
One way or another, the calculation of the total amount is carried out taking into account the specific situation. Therefore, it is quite difficult to accurately determine the value of the agreement. In this case, we can only talk about approximate figures.
Insurance company offers
Credit institutions offer insurance services provided by both subsidiaries and other accredited offices. Citizens who want to get a targeted loan should be careful and study all offers to find out which company is cheaper to draw up an agreement with. It is important to remember that the client has the right to independently choose an insurer from the list provided, without going beyond its scope.
The most popular insurance companies offer the following rates:
- SOGAZ. Here the rate is 0.17% of the total loan amount.
- Renaissance Insurance. It also offers favorable conditions at a tariff of 0.18%.
- Sberbank Insurance. The company is part of the financial organization Sberbank. Here the cost of insurance ranges from 0.5 to 1% of the total loan amount. In case of refusal, the loan rate increases by 1%. If the client wishes to change insurer, the remaining funds will be returned only after the mortgage has been fully repaid. Otherwise, the money will not be returned.
- VTB Insurance. The organization offers clients a comprehensive insurance program, in other words, it will not be possible to draw up an agreement only for health and life. The agreement also includes title and collateral insurance. The average rate is 1% of the loan amount. When changing companies, conditions similar to the requirements of Sberbank apply. The agreement is concluded for the entire period of the mortgage loan with annual renewal. For other financial institutions, the policy period is 1 year.
- Alfa Insurance. Insurance is issued either for 1 year or immediately for the entire mortgage period. The rate is from 0.8% to 1% depending on the specific situation.
- VSK Insurance House. The tariff for the cost of a life and health insurance policy is 0.55% of the total loan amount. The agreement is valid for 1 year, after which an extension is required. If the client wishes to terminate the contract before the policy comes into force, it entails a refund of the entire insurance amount, but provided that less than 5 days have passed from the date of consent to the date of refusal.
- RESO-Garantiya. The company offers different rates depending on the bank that provided the loan. For Sber, the rate is 1% of the loan size. For other credit institutions, only comprehensive insurance is provided, where life and health are calculated at a rate of 1%, property - 0.18%, title - 0.25%.
- Alliance Rosno. When calculating the cost of a life insurance policy, a rate of 0.87% is applicable. At the moment, the organization does not cooperate with Sberbank.
- Rosgosstrakh. Here the tariff depends on gender. For men - 0.56%, but for women - 0.28%. For Sberbank: men - 0.6%, women - 0.3%. In case of early termination of the agreement, the remaining part of the insurance is paid only upon full repayment of the target loan.
- Yugoria. The company issues a comprehensive insurance contract at a rate of 3%.
So, if we talk about where it is cheaper to insure life and health when taking out a mortgage, Renaissance Insurance and SOGAZ offer optimal conditions.
When choosing an office for mortgage life insurance, you need to carefully study all the offers that exist in this area. You should rely on the list of companies provided by the financial institution where the loan agreement is drawn up. According to the data, the highest insurance rates are offered by Sberbank Insurance, but the lowest rates are offered by SOGAZ and Renaissance Credit.
Financial institutions provide loans to customers to purchase real estate. Many residential projects are being built in Russia, which makes it possible to provide living space for many citizens. But only some people can buy it with their own money.
Therefore, banks offer what will allow you to move to a new home soon. And payment of the loan and interest on it will be carried out gradually. To obtain a loan, you must obtain insurance.
The mortgage repayment period is set to 30 years. A lot can happen in that amount of time. Therefore, the bank needs guarantees of money back in the event of an insured event. Using this measure, the institution seeks to protect itself from financial risks. Purchasing an insurance policy increases your mortgage costs.
The borrower cannot refuse insurance, which is mandatory for long-term lending. Banking programs designed for a short-term period may not require mandatory insurance. They are limited in loan amount and also have a high interest rate.
Why is life insurance required for a mortgage?
Insurance takes a little time. Often the borrower can delegate this procedure to a bank that cooperates with insurance companies. A person only needs to choose the appropriate option.
With this insurance option, the cost can be repaid through a loan. The client has the right to obtain insurance from any independent company.
At the same time, he collects all the documents himself and pays money from personal funds. In such circumstances, the financial institution requires a copy of the agreement.
Insurance allows you to avoid paying borrowed funds to relatives in the event of the death of the borrower. If an accident occurs, the insurance company pays the debt obligations, and relatives can re-register the housing in their own name. Financial institutions charge a lower mortgage interest rate when the client is insured.
If there were no insurance, then upon the death of the borrower there would be no one to pay the debt. The bank will be forced to evict the family of the client who took out the loan from their home, and put the apartment up for auction. The amount received from the sale will be used to pay off the debt, and the remainder will be returned to the borrower's relatives. But this money is not enough to purchase new housing.
Relatives of the borrower can take out a mortgage for themselves and continue making payments on it. But if there is no breadwinner in the family, then the money will have nowhere to come from. If the loan repayment went through without problems, then clients believe that they overpaid due to insurance. People who are faced with an insured event are grateful for timely insurance. Therefore, reviews about this are often diametrically opposed.
How to find out the cost of life insurance for a mortgage?
The price of this service depends on the specific case and the tariffs established by the insurance agency. This type protects the borrower from various risks: accidents, health problems. They lead to the inability to pay the mortgage to the bank. During this period, the financial burden falls entirely on the shoulders of the agency.
When selecting an insurance company, pay attention to the amount of the premium and the conditions offered.
The following should be considered:
- in what order the contributions are paid;
- sanctions established for late payment;
- cases provided for payment, etc.
To calculate, you can use a special calculator, which can be easily found on the website of the banking institution. It is convenient and easy to use; if difficulties arise, you can seek online help from bank employees. Using an online calculator, you can simply make an approximate calculation. Accurate data is provided by the company when concluding an insurance contract.
It is profitable to insure life with the state company Rosgosstrakh. The client receives optimal rates and a payment guarantee. Here you will be offered a comprehensive program that protects the borrower from many risks. It includes life and health insurance, purchased property, and loss of title to real estate.
Life insurance procedure
Insurance in different banks is issued in the same way. A person brings a life insurance contract or the necessary package of documents. The validity period is equal to the lending period. All companies work according to the same scheme, and they do not put forward any special requirements. It is worth choosing a convenient payment method and a company with which it is convenient for a person to cooperate. When working with one insurance agency for a long period of time, the client can receive a certain discount.
The price of insurance depends on the client’s age, place of work, and health. Therefore, the company offers individual conditions for each client. You should honestly indicate your existing ailments. If there are none, then you will need to provide the result of a medical examination. This is necessary to prove that the person does not have an incurable disease. Such an illness can be the reason why a person is denied insurance. It is better to undergo examination in a public clinic, having first taken an official referral.
The older the borrower, the more he will have to pay for life and health insurance. Insurance payments must be made once a year, and their amount decreases annually along with the mortgage debt. Carefully study the list of insured events before signing the contract. If the loan is , then you should also terminate the insurance contract and return the money paid for the unused period.
If an insured event occurs, you should immediately contact the lender and the insurance agency to notify them of the incident. The insurance company pays the financial institution the actual amount of damage, but not more than the insured amount.
Gives confidence in the future. This is reliable protection in the event of an insured event against debt obligations.
For the majority of Russian residents, the housing issue can only be resolved by resorting to bank lending. When taking out a loan, you will be required to insure the purchased property, which is pledged as collateral, since this is mandatory and regulated by law. In addition to this, banks always offer mortgage life insurance from 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 will it all cost.
What is mortgage insurance
Since the main players in the lending market are banking structures, they often put forward their own terms of play. This usually concerns insurance. Today, banks offer borrowers to purchase a comprehensive insurance policy, which includes:
- real estate insurance as collateral. The purchased housing is subject to insurance for the entire term 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 is unable to repay the debt to the bank, the insurance company will do it for him. Such cases include injury resulting in temporary incapacity or disability, serious illness and even death. Provided that the person had a serious illness at the stage of concluding the loan agreement and concealed this circumstance, the insurance will not be paid.
- title insurance. The bank can offer you this type of insurance, provided that the legal purity of the property being purchased is questionable. The maximum duration of the contract is 3 years, since, according to the law, during this time all controversial issues regarding property rights lose their force.
The insurance allows the borrower to receive a tax deduction once a year.
What does life insurance provide for a mortgage borrower?
It may seem that life and health insurance on a mortgage only benefits the lender. However, this is not entirely true, since the policy protects the borrower if he is unable to pay off his debts. In this case, all costs are borne by the insurance company. The insurance company can pay off the debt in full, or do it monthly for the insured person. This happens when:
- long period of incapacity (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 payment if the client concealed the presence of serious diseases, which include HIV, AIDS, and oncology. In addition, the insurance company will refuse under the following circumstances:
- the borrower was in a state of alcohol or drugs;
- in case of suicide, with the exception of cases of incitement to it;
- if the borrower got into an accident without having the right to drive a vehicle;
- when committing a crime, if proven by a court.
Features of recognition of an insured event
Having recognized an insured event, the insurer is obliged to compensate 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 contact the Investigative Committee with an application. The debt will be repaid in proportion to each day of illness. If you receive a disability, you must write an application no later than six months after the insurance expires. Upon the death of a client, 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 mortgage life insurance policy is not a requirement. 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 for refusal to issue a mortgage loan, although the majority of the population has this kind of stereotype.
Legal regulation
In no regulatory legal act will you find a regulation that the borrower must insure his own life when buying a home with the help of loan funds. It’s a different matter when it comes to insuring a property. In this case, it is necessary to refer to the federal law “On Mortgage”, paragraph 31 of which states in black and white that this condition is mandatory.
Bank requirements
Based on the information above, it can be understood that banking organizations do not have the right to require life insurance for a mortgage, much less to arbitrarily include this clause in the loan agreement. The lender can only offer to buy the 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 your mortgage
The first thing that a refusal to purchase a policy can lead to is an increase in the interest rate on the loan. The bank may also shorten the loan period or request more money as a down payment. If you think this is illegal, you are wrong. The credit institution gives you the right to choose: purchase a policy and receive preferential lending conditions, or take money on a general basis.
Sanctions of mortgage banks for refusal of insurance
Having found out whether it is necessary to insure life on a mortgage, you need to obtain information on how much interest banks can increase the annual rate. There is no single approach to this issue, so it is necessary to find out this information from each lender separately, because the corridor between the minimum and maximum values can reach several percentage points. Here are just a few examples of how much the rate will change:
- Sberbank +1%;
- Bank of Moscow +1%;
- VTB24 +1%;
- Deltacredit +1%.
- Raiffeisenbank + 0.5%;
- Rosselkhozbank +3.5%;
Which banks offer life insurance for a mortgage?
If life insurance for a mortgage at Sberbank or VTB implies the mandatory purchase of a policy from a 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, the purchase of insurance is only your personal matter. Mortgage without life insurance is offered in:
- Globex;
- Gazprom, etc.
How to draw up a life insurance contract
If you have a life insurance policy, this does not mean that you can provide it, since 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 agreement, where the beneficiary is the lender. You can do this in:
- insurance company;
- jar.
The insurance will take effect from the moment the first premium is paid.
At the bank when concluding a mortgage agreement
When purchasing a voluntary life and health insurance policy for a mortgage from a bank, you will be asked to enter into an agreement with a specific company, so immediately ask to find out if you can choose another company, because then the insurance may cost less. This is due to the fact that the insurer pays the bank a certain percentage of remuneration for each policy concluded. The insurance company includes this money in the cost of the contract.
In an insurance company accredited by a bank
Not all banks will 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, choosing an independent company is beneficial in that he can contact 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 clients, can offer very profitable options - it is better to insure yourself with a reliable partner. This is due to the fact that mortgages are issued not for one year, but for a long period, and a company’s experience in the market is an indicator of its reliability, because many new companies may go bankrupt in the next year or two.
Documents for issuing an insurance policy
In order to conclude a personal insurance contract, you do not need many documents. Sometimes additional papers may be required, but, as a rule, the list is limited to the following:
- passport;
- A completed application form;
- mortgage loan agreement;
- medical certificate.
The form can be filled out directly on site. It indicates basic information about the client, place of residence and type of loan. The mandatory medical certificate provided must contain all seals and signatures, as well as reflect information about the state of health and examinations performed.
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 clients to renew their policies. This helps to save additional money, because with some insurers the amount of compensation can reach several percent of the amount owed.
Cost of life insurance for a mortgage
The cost of the policy directly depends on the organization you purchase it from and the balance of debt, so each time you enter into a new life and health insurance agreement with a mortgage, the amount will be less than the previous one. If the policy was purchased at the office of the insurance company, you will need to take a certificate of the balance of debt in order to correctly calculate the amount of the fee.
If you don’t know which company to choose, you can use an online calculator that will help you navigate the existing offers. It cannot be said that it will give the exact price, since the final calculation will be made by an employee of the insurance company, but it will help you find out where there are more profitable 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 premium amount will vary for different clients. This is due to many factors that insurers pay attention to when applying decreasing or increasing coefficients:
- age. Elderly people will have to pay more because the risk of illness or death is higher than that of younger borrowers.
- floor. It doesn’t really matter, but for men the tariff may be higher, since they have a shorter life expectancy than women. On the other hand, a woman may go on maternity leave and the insurance company 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 illnesses and does not belong to a risk group due to health conditions, then the insurance premium for him will be reduced.
- profession and lifestyle. According to statistics, people employed in hazardous and difficult working conditions live shorter lives. Insurance companies also take this into account when issuing a policy with an increasing coefficient.
- mortgage loan size. The higher the amount of debt, the more insurance will cost, since they are calculated from the size of the loan, and do not have a strictly established value.
Tariffs of insurance companies
To summarize, you can understand that the exact rate of life insurance for a mortgage is calculated on an individual basis, and it is influenced by many factors - from age and gender to health and lifestyle. However, in each case, insurers have a base amount expressed as a percentage. It is used as a starting point when making calculations. It is different in every organization:
| Sberbank | |
| VTB insurance | |
| RESO-Garantiya | |
| Ingosstrakh | Since mortgage life insurance implies that the beneficiary is the lender, the funds will be transferred to him directly, bypassing you. Documents for compensationWhen an insured event occurs, the insurance company will need to prepare a number of documents that will serve as the basis for debt reimbursement:
Recalculation for early partial loan repaymentIn case of partial early repayment, you have the right to demand that the insurance company recalculate the amount of the premium, and if there is an overpayment, return part of it. To do this, you will have to bring a certificate from the bank about the balance of the debt and a schedule for calculating monthly payments, which is issued when signing the loan agreement. Here, too, you need to read the terms of the life insurance contract for a mortgage, since in some organizations this can be done only a few times during the policy period or this possibility is not provided at all. Refund of insurance premium upon full early repayment of the mortgageTermination of a life insurance contract is possible upon full repayment of the debt to the bank. In some cases, the insurance company does not pay the balance, but this is stated in the contract. If such a possibility exists, you must write an application addressed to the head of the insurance 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 you have no financial obligations to the bank for the mortgage. The money is transferred by bank transfer to the account you specified. Video
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