“A wide range of opportunities with legal and financial features of the contract is available today. A life insurance policy can be used as a guarantee for a bank loan in addition to these options,” the article says.
People who purchase real estate by installments usually use this option. “There are several advantages to such a pledge. First of all, it is a free guarantee that allows the borrower to avoid, for example, the usual fees associated with obtaining a mortgage. Secondly, it is practical; if the insured person needs money to pay off the loan he can transfer part of the remuneration of the insurance company to the bank,” the article explains.
In case of the borrower decease, the insurance company will close the loan: “Lastly, such a guarantee allows the borrower to use tax benefits associated with obtaining a policy. As soon as the loan is fully repaid, the bank breaks the insurance coverage. Thus, people do not need to terminate the contract with the insurance company in order to provide the bank with the guarantee.”
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