When applying for a mortgage loan, many agree to sign an insurance contract just to get approval from the bank faster and easier. 90% of mortgage loans are concluded for a period of more than 10 years.
Mortgage insurance
When buying a property, you probably expect that you and your loved ones will not be left without a roof over your head even in a difficult life situation. This is exactly what the insurance company can take care of.
In critical circumstances, the insurance company will be able to assume obligations to repay the loan, in part or in full. The borrower's family will not be left on the street and will not receive the burden of debt obligations. Neither bank nor third parties are not to lay claim to real estate.
In case of temporary inability to earn money, the borrower will be able to receive financial support from the insurance company.
The borrower can often count on reduction in interest rates. Thus, the final loan amount with insurance will be slightly higher than the loan amount without insurance but with a higher interest rate. Based on one loan installment, the difference will be even less significant.
If you pay off your mortgage early, the insurance company may refund you part of the premiums paid based on the actual coverage duration. The insurance contract indicates how much money and on what terms you can return.
Term Insurance
The simplest type of life insurance when buying a real estate is term insurance. Such policies imply that the insurer assumes the obligation to pay the beneficiary the insurance sum payable at death of the insured, and the insured assumes the obligation to regularly pay insurance premiums to the company.
The size and frequency of premiums are set by agreement between the parties, for example, in equal monthly amounts throughout the year. The choice of payment method must be determined when entering the insurance contract.
The insurance agreement is usually concluded for one year and contains a condition that allows it to be extended. Since the insured gets one year older and his health condition could change for the worse, the insurer reserves the right to revise certain contract provisions and renew the agreement for the next year on different terms, if both the policyholder and insured agree on that.
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