There are compulsory insurance and optional insurance, these are distinguished by the existence or not of legal enforcement of insurance. See in this article whether it is optional or mandatory to have a housing credit life insurance.
Does mortgage credit life insurance is optional or mandatory? If today you reach your bank and want to make a home mortgage loan do they accept to make you finance without life insurance?
What is the life insurance contract?
Life insurance covers the risk of death or in the event of permanent absolute incapacity or total permanent disability of the insured person, and may have complementary coverages, which may vary from insurer to insurer. We suggest you read the article that we have dedicated to the difference between ITP and IAD.
Compulsory insurance and optional insurance
Are compulsory insurance, for example:
- Motor Vehicle Liability Insurance (third-party motor insurance)
- Worker’s Insurance for Employees
- Fire insurance and nature elements for horizontally owned buildings.
They are optional insurance, for example:
- Personal Credit Life Insurance
- Home Equity Loans
- Health Insurance
Why make a credit home with life insurance?
Taking life insurance can be a decision of great prudence. We tend to dislike insurance, especially life insurance and car insurance. However, we forget that insurance exists to protect financially certain facts.
In the case of housing credit, life insurance covers loss of income, whether due to death or a highly debilitating illness. This event will have significant impacts on the financial life of the family, so it may be prudent to guard against this situation (here we may think that it does not make much sense to pay more for life insurance than for the benefit … but then maybe it makes perfect sense to change your insurance to another insurance company?)
Having said this, life insurance will serve to transfer or share the economic risk of possible fatalities, which may lead to situations of default and degradation of the quality of life of the household.
Does the Bank Have a Choice?
It often happens that not being mandatory, the bank requires an additional guarantee. in practice, this “additional guarantee” is more than a way of obtaining additional income. One way to sell us one more product. It may not be required by law, the bank may refuse to give you the credit. Anyway, it’s the rules of the game. If you already have your housing credit, you can always change insurer … or else try to transfer your housing credit and thereby save on life insurance and spread.