Mortgage life insurance. Insurance must be paid every year. The amount of insurance premiums can be significantly reduced

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Mortgage lending is now a fairly common way to purchase your own home. Each borrower has already encountered or heard about insurance with such a loan. Sometimes this turns out to be an unpleasant surprise, as it forces the client to fork out additionally. However, although mortgage life and health insurance is not mandatory, according to most experts, it serves as a “safety cushion” for both the borrower and the bank.

A life insurance policy for a mortgage obliges the insurance company to pay the mortgage debt in the event of an insured event with the borrower. Repayment can be partial or full.

Expert opinion

One of the inexpensive and reliable insurance companies in 2019 is Ingosstrakh. The list of services provided by the company also includes mortgage life insurance. You can familiarize yourself with the conditions and apply for insurance on the official website of Ingosstrakh.

That is, this insurance covers certain risks, namely:

1. Death of the borrower. In this case, it is necessary to apply to the insurance company during the term of the contract, but not later than 1 year from the date of the fatal accident or illness.
2. Obtaining a disability of 1 or 2 groups. You should contact the insurer no later than six months after the end of the insurance contract.
3. Sick leave for more than 30 days. Depending on the insurance company, the payment is made either immediately or after the sick leave is closed.

In the first two cases, the insurance company pays the entire amount of the current debt. And with a long sick leave, the calculation is made daily at 1/30 of the loan payment. Life insurance gives the borrower a guarantee that in the event of a loss of working capacity, the insurance company will continue to pay his debt, and no debt will arise.

Important point: there may be situations when, after the disability insurance payment, the borrower died. Then there are no more payments. And if at first the client was on sick leave and the insurance company transferred loan payments to the bank, and then disability set in, then payments are due for it. But sick leave payments will be deducted from the total amount.

To insure a co-borrower and be eligible to receive payments, it is required to take out the same life insurance policy for him. Otherwise, if an insured event occurs with the co-borrower, the credit debt will not decrease, and will completely fall on the shoulders of the borrower.

It is important for the borrower to know that the insurance company may refuse to pay in the following cases:

1. The insured person has AIDS or HIV and is registered with a dispensary.
2. In case of suicide (except for the case of incitement to suicide, which must be established by the court).
3. If, according to the analysis of the blood of the deceased, it is determined that he used alcohol, narcotic substances.
4. The insured person drove the vehicle without having the right to drive it.
5. The insured event occurred in the course of the crime and this was proved by the court.
6. The presence of a serious chronic disease at the stage of concluding an insurance contract, which the borrower hid.

Any of the above circumstances will lead to the fact that the insurance company will not close the debt to the bank. As a result, the borrower or his heirs (if they inherit) will have to pay off the mortgage.

Expert opinion

Alexander Nikolaevich Grigoriev

Mortgage expert with 10 years of experience. He is the head of the mortgage department at a major bank, with over 500 successfully approved mortgage loans.

Events such as the loss of a job, the death of a close relative (including a co-borrower, if a separate policy was not issued for him), salary delays cannot serve as a basis for contacting an insurance company. In these cases, the borrower should contact the bank directly for a possible loan restructuring, if necessary.

For the bank, this type of insurance is important because of the large credit debt, besides, mortgage loans are characterized by a long term. No one can say with certainty what will happen to the client after a given period of time and whether he will be able to pay the mortgage.

The lack of insurance can lead to lengthy litigation in the future, and the bank is not always able to return the loan. There are many nuances in such disputes, in particular, it is impossible to take away the only housing from the borrower. Thus, for a bank, a life insurance policy serves as an additional guarantee that the money will be returned in any case.

Is life insurance required when taking out a mortgage?

The question of whether it is mandatory to take out life insurance with a mortgage is very relevant, especially if insurance payments are high. According to Federal Law No. 102 "On Mortgage" it is voluntary. Therefore, the bank cannot oblige the client to take out an insurance policy.

However, due to the increase in its risks, the bank may offer the borrower other, more stringent lending conditions. In particular, increase the interest rate, reduce the term, request a guarantee, etc.

In general, there are three types of mortgage insurance:

1. Mortgage property insurance. It is required by law. The property is insured against destruction and external damage (eg earthquake, house collapse) for the entire loan term. For insurance of interior decoration and interior items, it is necessary to include this in the contract as a separate clause.
2. Health and life insurance. Upon the occurrence of an insured event at any term of the loan agreement, the entire balance of the debt or part of it is assumed by the insurance company.
3. Title insurance. If in the past there were contentious issues about ownership of mortgage real estate, then after the conclusion of the loan agreement, “unexpected guests” are possible in the form of applicants for the borrower's property. Title insurance just protects the interests of the bank in case of loss of ownership of the client. In addition, the borrower can also take out separate title insurance for himself to have a “safety cushion” in the form of payments from the insurance company if the property is legally unclean. The validity period of such agreements is always no more than 3 years, since after that, according to the law, all property disputes are not accepted by the courts. This mortgage insurance is not required, but the bank may require it if the property being purchased is in doubt.

Read also other articles from our experts:

Where is it better to take a mortgage in 2019, which banks have the most favorable conditions, and how to make your mortgage as profitable as possible -.

When selling an apartment on a mortgage, you will definitely come across such a procedure as real estate appraisal. Why is it needed and how does it go, the essence of the procedure and the main features that you will encounter in the article at this link.

3 reasons to buy insurance

For the borrower, life and health insurance will ease his situation in case of possible force majeure. Otherwise, with partial or complete disability, you will have to solve the issue with a loan only on your own. The issued insurance policy allows you to count on a number of preferences from banks.

Of these, 3 main benefits for the borrower can be distinguished:

1. Reduced percentage.
2. No requirement for a mandatory guarantee.
3. Smaller down payment.

Of course, there are banks that offer mortgages without mentioning life insurance at all. But the decision in any case remains with the borrower. Tempting offers often hide higher commissions and interest, because in the absence of insurance, the bank has to reduce its risks in other ways. We advise you to take out a mortgage loan with life and health insurance, especially with a long repayment period.

Expert opinion

Alexander Nikolaevich Grigoriev

Mortgage expert with 10 years of experience. He is the head of the mortgage department at a major bank, with over 500 successfully approved mortgage loans.

Refusal of life insurance entails an increase in the interest rate on mortgages by 0.5-3.5% in different banks. More stringent requirements are put forward for the borrower, sometimes reducing the maximum possible loan amount, which does not suit all customers.

When choosing an insurance company, bank managers can persistently suggest a particular insurer. This is due to the incompetence of individual employees or due to the need to fulfill the plan for additional services. Meanwhile, the borrower can insure in any insurance company that meets the requirements of the bank, that is, accredited in it.

We recommend comparing the conditions and cost of insurance in several companies - the difference can sometimes be noticeable. Insurance at the bank is most often more expensive, but it can also be the other way around when the client is offered suitable conditions as part of special promotions or due to long-term cooperation with him.

The life and health of military personnel and some other categories of borrowers may already be insured. But to refuse such insurance in the bank still does not work. The fact is that under this insurance, the borrower himself or his relatives receive the payment, and the money may not be used to pay off the mortgage. The bank also needs to be the beneficiary (that is, the recipient of the insurance payment).

Where do mortgage insurance - top 5 companies

Consider the conditions of 5 popular insurance companies in which you can insure life and health for a mortgage. The comparison uses data from the reputable rating agency Expert RA (raexpert.ru) from the financial reliability rating of insurance companies providing life insurance services.

Ingosstrakh

One of the largest and well-known companies in the Russian market. Rating agency "Expert RA" characterizes Ingosstrakh with high creditworthiness, financial reliability and stability (ruAA).

The organization has attractive mortgage insurance offers. There are Ingosstrakh offices even in small towns and villages. The site has a special calculator that will help calculate the cost of insurance based on various conditions.

After the calculation, the client will be offered to issue an insurance policy and pay for it online without leaving home. After payment, a letter with a policy certified by an electronic signature will be sent to your e-mail. The client only needs to sign it on his part.

Life and health insurance in Ingosstrakh has the following advantages:

1. Large, stable and solvent company.
2. Wide distribution in regions, small towns.
3. Discounts for online registration. For example, for Sberbank customers, the organization provides a 15% discount when applying for a policy online.
4. There is a convenient calculator for calculating the cost of insurance.

Insurance Calculator

You can calculate insurance on a special Ingosstrakh calculator, and apply for it online, directly on our website or on the website of the insurance company at this link.

For example, the annual cost of life insurance and disability insurance for a female borrower aged 35, for a mortgage taken from Sberbank at 10% for an apartment with registered ownership, with a balance of debt of 1,500,000 rubles, will cost 5,211 rubles (with a 15% discount) .

Calculate the cost of life insurance in Ingosstrakh

VSK Insurance House

A fairly large and well-known company with a moderately high level of reliability and financial stability (ruA +) according to the Expert RA rating agency.

It occupies the 7th place in terms of collections in the life insurance niche. The regional network has more than 500 branches and offices throughout the country. It is possible to apply for a policy online, but the rates are quite high.

Calculate the cost of insurance in VSK. The conditions are the same as in the previous example. The cost of insurance under the Protected Borrower program will be 5,100 rubles. However, the amount is not final and may change upwards when specifying additional data (weight, place of work, etc.) when filling out the questionnaire.

RESO Guarantee

The organization is engaged in voluntary insurance against accidents and diseases, life insurance. The company's reliability rating, according to the Expert RA agency, ruAA+. An organization with a high level of reliability, creditworthiness and financial stability.

RESO-Garantia is a member of the All-Russian Union of Insurers and the Federal Self-Regulatory Union of Insurance Organizations. It is the only company that insures clients over 60 years of age. The official website has a handy cost calculator.

Having calculated the cost of insurance on a calculator with the same conditions, we get the amount of 3,555 rubles. The amount may change when you specify additional data for the execution of the policy. For Sberbank, the result is not valid, the cost will be higher.

Calculation of insurance in RESO guarantee

Sberbank life insurance

A subsidiary of Sberbank of Russia, was created to insure the life of its borrowers. The tariff line includes the “Protected Borrower” offer for mortgage clients. Allows you to reduce the Sberbank mortgage rate by 1%.

The Expert RA agency characterizes the company with the highest level of creditworthiness, financial reliability and stability (ruAAA). The rating outlook is stable.

Among the advantages, we highlight the reliability and stability of the company, the possibility of issuing a policy on the official website online with a 10% discount. The maximum debt balance is 1,500,000 rubles, if the amount is more, insurance is issued at a bank branch.

The downside is the high cost of the policy - 30-40% higher than that of other accredited insurers. The calculation on the Sberbank website shows that the cost of insurance under the same conditions will be 5,160 rubles.

The cost of life insurance in Sberbank

SOGAZ Life

Subsidiary of Gazprom and Rossiya Bank. A serious company with the highest level of financial reliability and stability according to Expert RA (ruAAA rating). It mainly accepts mortgage clients of Gazprombank, who have practically no chance of insuring themselves in another organization.

The company is actively developing classic long-term life insurance primarily for corporate clients, bank life insurance for borrowers, cooperating with banks, and long-term life insurance for individuals who are not employees of partner companies.

The basic life insurance rate for Sberbank is 0.21%. With an insured amount of 1,500,000 rubles, the cost of the policy for 1 year will be:

1,500,000 / 100% * 0.21 = 3150 rubles.

One of the most inexpensive options for Sberbank.

How much does mortgage life insurance cost and why can it rise in price?

On average, life insurance will cost the borrower 0.5–1.5% of the mortgage debt. The policy is usually issued for 1 year and extended for the next. With a decrease in the amount of debt, the amount of insurance will also decrease. The borrower also has the right to change the insurance company.

The cost of the policy and the tariff for each borrower is determined by a weighted assessment of a combination of factors:

1. Floor. For men, the risk for this factor is higher, so when there is a choice of whom to put as a borrower and who as a co-borrower, it is better to put a woman in the first place. The policy will cost 30-50% cheaper. However, there are companies that do not attach significant importance to gender when withdrawing the final amount for an insurance policy.
2. Age. Older people have a higher risk of death or illness, and therefore the tariff for them is higher. The difference in rates between a 25 year old and a 50 year old client can be 5-10 times. Borrowers over the age of 60 are generally denied life insurance.
3. The presence of chronic diseases. They increase the cost of insurance.
4. General health. A medical certificate is required from the client. Any deviations to one degree or another affect the multiplying factor. Therefore, most clients prefer to remain silent about illnesses. We recommend that you do not hide the truth from the insurer, since concealment of illnesses can serve as a basis for refusing an insurance payment.
5. Excess weight. Insurance will definitely be higher for borrowers with a greater weight.
6. Profession. The more risky and dangerous it is, the higher the tariff will be. The risk of an accountant and an employee of the Ministry of Emergency Situations differs significantly. It is generally difficult for the latter to find a company that will agree to insurance.
7. The presence on hand of an already existing life insurance policy, where the beneficiary is not a bank. It is not taken into account by all credit institutions, but it will not be superfluous to provide it.
8. Amount of credit. The higher it is, the more multiplying coefficients are used by insurance companies.
9. Commission of the bank. Some banks cooperate with insurance companies and take a commission for attracted customers. Some want 20-50% of the cost of the policy from the insurer, others do not earn money on this at all, it all depends on the bank.

How much life insurance will cost is determined and taking into account the nuances of a particular insurance company. Marital status, the presence of children, other debt obligations, property, etc. can be taken into account.

Comprehensive insurance (life, title and bond) is usually cheaper. Borrowers should be warned to take out a life insurance policy before the mortgage is approved. Otherwise, if the bank refuses, it will be impossible to return the money paid.

When calculating the cost of mortgage lending, it is necessary to take into account the commission of the bank, the services of an appraiser and the cost of insurance.

Of course, additional spending does not cause much joy. Any borrower will not want to pay where you can save.

Do you need mortgage life insurance? In case of refusal, the bank “threatens” with an increase in the rate on the loan. And is it worth it to win a few thousand on contributions, because to guarantee health and no fatal circumstances, alas, no one can.

We will figure out whether it is necessary to pay insurance to the borrower.

Moreover, there are three of them:

What to insure?	Mandatory or not?	Peculiarities
1. The walls of the apartment	Mandatory by law	1. Finishing and doors, plumbing, and furniture are not included in the policy. 2. A policy for new housing is issued after receiving documents for a finished object.
2. Life and health of the borrower	Voluntary: Borrower decides whether to take out a policy or not.	1. The policy is issued at the time of conclusion of the loan agreement. 2. If there are several co-borrowers, each must insure his own life.
3. Title (rights to the apartment)	Voluntary type of insurance.	1. Not needed on the "primary" It will help if the apartment is “with history”, and the previous owners sold it in violation of the law. 2. The old owners can appeal the deal within the next three years. For this period, you need a policy.

Summary. On the first point, the borrower has no choice. The second and third are worth considering. The concept of "title" is disclosed in the table, but what does mortgage life insurance imply?

A mortgage agreement is most often concluded for more than one year. Anything can happen to a borrower over a long period of time. The bank will not take into account these circumstances.

Money must be returned according to the schedule, to the debtor or heirs. A client without a policy and his relatives will be left alone with the problem.

A protected borrower (heirs) can count on assistance in the event of the following events:

In order not to increase late fees, you need to make payments on time while collecting documents on inheritance, disability, etc.

You can also opt out of life and health insurance. But given the term of the loan, it is reasonable to take out a personal insurance policy.

How to get life insurance without overpayment or get a refund?

Large banks open their insurance companies. For example, Sberbank got its own insurer, Sberbank Insurance. Whose policy will be offered when drawing up a loan agreement, it is unnecessary to explain.

Convenient for business: money revolves within the same structure. Convenient for the client: the principle of one window operates.

But there are some downsides:

• The policy here is often more expensive.
• All eggs in one basket. The insurer, who is responsible for his finances to the bank, himself depends on the credit institution.
• It will take many years to insure your mortgage. Is it convenient to visit this branch every year?

In addition to "pocket" insurers, the borrower learns that there are accredited insurance companies. Mortgage can be insured only in organizations approved by the bank.

We already wrote in one of our articles about.

It is worth listening to the opinion of the bank: it checked the reliability of the insurer. But the client has the right to choose the company where it is cheaper, whose insurance program suits more.

Three tips:

1. If you already have a policy at the time of lending? Contact the insurer, he will change the terms of insurance. The bank must be the beneficiary.
2. If you change your mind about insurance. The law provides for a "cooling off period". What it is? Within five days of registration, the client can return the money for the policy if there are no insured events. But the bank will most likely raise the loan rate by 1-2% if the borrower refuses to insure life.
3. If you decide to change the insurance company? For the fuss when obtaining a loan, the borrower did not compare how much the policy costs from different insurers. And when I found a calculator on the sites and calculated the cost, I realized that I was in a hurry. The client has the right to terminate the insurance contract and conclude it elsewhere. The bank must be notified of this.

How much does a policy cost and what does it depend on?

How much is insurance? Life insurance rates start at 1%. But this is the “average temperature in the hospital”, since the size of the premium is affected by:

• Information about the borrower in the questionnaire of the insurer.
• Sum insured. The larger it is, the more expensive the insurance.
• Availability of policies for other types in this company (discount for regular customers).

The table shows the average tariff rates of popular insurance companies:

insurance organization	Tariff rate
Alpha Insurance	0.24
VTB Insurance	1
Ingosstrakh	0.5
RESO	0.5
Rosgosstrakh	0.5
ROSNO-allianz	0.19
Sberbank	1
Sogaz	0.17

Using the diagram provided, you can visually familiarize yourself with the tariff rate:

If you can choose the insurer and the conditions, then you need to answer the questions of the questionnaire with the utmost honesty. Perhaps the conditions will not be the best, but the company will not have a reason to refuse because of false information.

What the insurer wants to know about the client:

1. Personal data.
2. Field of activity.
3. Passion for extreme sports.
4. Medical issues (from height, weight, bad habits to the life expectancy of relatives and the date of the last sick leave).

Video about life insurance in any insurance company:

Sometimes they ask to be examined, the tariff will increase if:

• The client is overweight;
• Have hereditary or chronic diseases;
• Elderly age;
• Dangerous profession;
• A combination of these and related factors.

By the way, the cost depends not only on age, but also on gender: insurance for a man will cost more than for a woman. If other conditions permit, it is wise to make the main borrower a woman or someone younger.

Conclusion of the contract: we collect documents, read the conditions

An example of a health insurance contract

Life insurance contract, what to look for:

1. Term: the agreement is valid for the entire loan period, but payments are made annually.
2. Territory of insurance: the whole world.
3. Exceptions to payments: these will be discussed below.

The amount insured decreases along with the debt to the bank, and with them the insurance premium. Bad news: the rate during this increases due to the increase in age, so the difference in contributions from year to year may not be felt.

To conclude an agreement, you need:

• Application form (to be printed on the spot);
• Contract of sale or equity participation (copy);
• They may ask for a certificate stating that the client is not registered with a psychiatrist.

Photos of documents:

Useful video:

Payments: what you need to be prepared for

There is a list of events that will release the insurance company from the obligation to pay:

• If harm to health, life was caused at the time of committing unlawful acts (including drunk driving);
• The event was due to a suicide attempt, war, nuclear energy;
• The event is caused by a disease already present at the time of conclusion of the contract;
• Harm to health, life caused for the sake of obtaining insurance (the fact must be proved by the insurance itself).

In order for the refund to go smoothly, you need to:

1. Notify the insurer and the bank about the event;
2. Contact the doctors, and if necessary, to the commission for obtaining a disability;
3. Collect documents;
4. Keep paying your mortgage.

The list of documents will be announced by the insurance expert. It usually includes:

Statement	The form will be provided by the insurer.
Insurance contract, policy and receipts	Copy from client instance
	Copy
Documents about the circumstances of the incident	Received by the client (heirs): police protocols, an act of an accident at an enterprise, a death certificate of the insured
Medical documents	Taken in a medical (social) institution: a bulletin, a certificate of disability, an extract from a medical card
Information about the amount of debt	Issued at the bank

Let's summarize: The bank will definitely require to insure the apartment, the borrower has the right to refuse other types of insurance. In this case, the loan rate will increase in most banks by 1-2%. There are exception banks (Gazprom does not require health and life insurance), but they are few.

The insurance rate starts from 1%. The client has the right to look for a cheaper option. The antimonopoly legislation will not allow limiting his choice.

Opening a credit line is a responsible step in life, as it is associated with some material dependence on circumstances. Let's suppose that while everything is good with health, there is nothing to fear with the company in which you work conscientiously. But if unforeseen circumstances occur related to the loss of ability to work or work, then paying off the debt will become a big problem.

The conclusion of an insurance contract will help to exclude such situations. This measure protects not only banks, but also clients of insurance companies from losses.

Credit life insurance

An urgent loan issued on the day of application or upon purchase of goods, opened for a period of several months to several years, is a risk for the bank. In the short period of time while the papers are being signed, it is difficult to study the financial condition of the applicant for money. Moreover, this kind of loan at interest often does not require the presence of guarantors.

The insurance contract protects the client. The insurer undertakes to repay the loan instead of him upon the occurrence of insured events. Banks are more willing to open a credit line for those who are ready to insure, because this is a guarantee of receiving finance with interest. Moreover, borrowers, by concluding an insurance contract, receive additional income (commission).

Features of mortgage life insurance

Large banks of the country require from their customers, as they allocate them an impressive amount for a long time.

Loans without insurance are usually denied.

This is due to the fact that the return of money will occur for one or several decades. During the specified time, a person’s health can be seriously shaken or even death can occur. The policy requires additional costs, but opens up certain opportunities for insured persons:

• lower interest rates on housing loans;
• postponement of regular payments and refinancing of the loan in case of temporary impossibility of paying the debt;
• repayment of the loan by the insurer upon the occurrence of an insured event;
• a guarantor of the preservation of housing for the borrower's family in the event of his death, disability or serious illness.

This type of insurance has certain features:

1. According to the developed legislation, it is imperative to insure the subject of pledge against destruction or damage. But banks require their customers to take out a life, health and property loss risk insurance policy.
2. Decrease in insurance premium over time. This amount is calculated based on the loan balance. Once a year, employees of the insurance company analyze the amount of debt and recalculate the insurance premium for the new year.
3. Protection of own capital from inflation. If a certain amount is set aside for the payment of a loan, intended for an unfavorable period of life (loss of a job, etc.), then by the time the black time comes, it may depreciate. Insurance payments are devoid of this disadvantage.
4. The mortgage lending agreement is drawn up for the entire period of debt repayment.
5. The bank requires the user of the loan that the insurance payment is equal to the amount of the loan plus ten percent.
6. Most borrowers insure the purchased apartment for the full cost. This measure allows them to be sure that in the event of an insured event, the debt is fully returned by the insurer. The remaining amount under the insurance policy is issued to the client in the hands.
7. The creditor bank requires the signing of an insurance contract with partner insurance companies.
8. Mortgage insurance relating to the possibility of losing the borrower's ownership of housing is mandatory for many banks and must be open for the duration of the debt repayment. Some borrowers require only a three-year insurance period for this risk. For new buildings, this is not a relevant issue at all.

Aspects affecting the cost of life insurance for a loan or mortgage

The cost of insurance depends on certain factors:

• the age of the borrower (the older he is, the more expensive the service);
• the health status of the client;
• type of professional activity;
• the availability of discounts from insurance companies (seasonal promotions that reduce the percentage of the insurance premium to 0.5-0.8).

All these points determine the size of the interest rate and drive it into the range from 0.3 to 1.6 of the remaining debt.

Directly the cost of housing insurance itself depends on the technical characteristics of the house (finishing, ceilings, etc.) and fits between 0.3 and 1.6 percent of the remaining debt. The insurance rate for the loss of housing rights (title) depends on the so-called "legal cleanliness of housing" (0.2 -0.7 percent).

Thus, the average value of the total cost of insurance fits into the amount of one or one and a half percent of the balance of the debt plus ten percent.

Required documents and procedure for concluding an insurance contract

Life insurance is issued in the form of a contract with the insurer. The client is obliged to submit the necessary documents:

• passport;
• medical certificate issued by a certain clinic;
• a questionnaire aimed at revealing the details of the lifestyle of the insured, filled out without embellishing the facts (if fraud is detected, insurance payments may be reduced).

It is important to know

When signing documents, pay attention to the following points:

• list of insured events;
• the amount of the insurance premium;
• the amount of regular payments;
• periodicity of insurance premiums;
• an algorithm for calculating the amount to be paid.

After issuing the policy, you should wait for the moment of receiving the loan. Next, you will need to pay for life and disability insurance. Insurance payments for finished housing (real estate and title insurance) are paid from the date of receipt of the borrowed amount. Payments for housing under construction are made after it is registered in the property.

Insured events

A mortgage insurance contract implies a large list of insured events, depending on the direction of the policy. And each company offers its own options.

Life and disability insurance includes a number of important insured events:

• death of a client
• accident;
• serious illness;
• complete loss of ability to work (disability of the first group);
• partial disability (disability of the second group).

Home insurance takes into account two insured events: complete destruction and partial damage to housing. The reasons for such misfortunes can be very different:

• fire;
• flood;
• natural disasters;
• illegal actions of any persons (arson, explosion, etc.);
• the presence of engineering errors;
• structural defects.

Home title insurance is based on a court ruling that causes the borrower to lose ownership of the property.

Insurance payments

It is possible to receive the required insurance payments by fulfilling the necessary requirements of insurance companies. One of the most important is the timely notification of the bank and the insurer. The second prerequisite is following the recommendations issued.

Death of the borrower

If, due to an insured event, the borrower lost his ability to work or died, the insurer repays the loan instead of him. The pledged property becomes the property of the victim or his heirs.

Damage to the insured apartment

Insurance payments in this case are made to the borrower.

But in this situation, there is an important nuance: home insurance only for the amount of the mortgage loan, and not for the amount of the full cost, may not cover the cost of restoring the property.

Loss of ownership of housing by the borrower

In such a situation, the bank receives insurance payments. The insurance company will reimburse him for the debt amount on the loan, increased by ten percent. The client of the insured can count on receiving money only if he insured the property for the full value.

Rules for the return of the cost of insurance on a loan or mortgage

Early repayment of debt allows you to terminate the insurance contract before its expiration. In this case, the insurer returns an amount equal to the amount of insurance payments for unused time. For example, if the insurance premium is paid for the current year, and after six months the loan is repaid ahead of schedule, then it is possible to return the premium falling on the second six months.

Contacting a bank or insurance company

The insured person must write an application for the recalculation of insurance payments and the return of overpaid money to the organization where the insurance was issued.

• An application drawn up in two copies must be registered.
• The second copy with the appropriate mark is given to the client.

Applying to a bank located in another city

Territorial deletion requires the application to be sent by registered mail with acknowledgment of receipt and a list of attachments. The correct actions are:

• An indication in the letter of the period during which the bank is expected to make a decision.
• The requirement to respond to the application in writing.
• Preliminary receipt of a personal account statement.

If the bank refused to return the money, then the written application should be sent to Rospotrebnadzor or the court.

Learn more about the nuances of insurance for mortgage and car loans in this video:

Mortgage insurance is a key point when purchasing real estate with a home loan. Legislation obliges to insure the object of pledge against damage or loss. But credit organizations quite often put forward requirements for disability and life insurance of a potential borrower. What is mortgage insurance, is it possible to refuse it?

Why do you need insurance?

The main players in the housing lending market are banks. Focusing on modern tax legislation, they oblige their clients to take out insurance for the purchased property. The task of banks is to minimize potential risks. Issuing a loan for housing is a risky transaction in itself, since the money is allocated for a maximum term at a minimum interest rate.

Title mortgage insurance is necessary to minimize the risk of challenging the transaction in court, especially for second homes. Often in practice there are also cases of resale of the same apartments and other errors. Life insurance is necessary for both the borrower and the bank. Since in the event of an insured event, mortgage payments will be paid by the insurance company.

Insured events

Even before signing a contract for mortgage and life insurance, you should familiarize yourself with the list of insured events.

If the life of the borrower is insured, such cases are:

• death;
• partial or complete disability.

When these cases occur, the property remains the property of the borrower, and the insurance company fully repays the loan.

If the insured object is real estate:

• damage or loss of property as a result of fires, floods, natural disasters;
• illegal actions of third parties;
• design defects.

Title insurance protects against loss of ownership of property purchased with a mortgage.

If the property is damaged, the borrower receives insurance compensation. And if it is physically lost and the right of ownership is lost, then the money is paid to the creditor bank.

In such cases, you should immediately contact the insurance company.

Registration process

Apartment insurance is issued on a voluntary basis. To do this, you must fill out an application about the desire to receive an insurance policy. Also here it is necessary to indicate the list of documents that will be attached to the application.

The insurance organization has the right to request any additional information and documents that were not specified in the application. She can also check the accuracy of the information provided by the insured. The latter undertakes to report all significant circumstances affecting the degree of risk identification.

List of documents for life insurance

As a rule, mortgage and life insurance can be obtained from a bank. Therefore, only a passport is required from the insured.

If an insured event occurs, the list of documents to be provided is significantly expanded.

Upon the death of the borrower, you must provide:

• A document confirming the fact of death.
• Certificate of cause of death.
• An accident report, if it happened at work.
• Documents issued by competent organizations confirming the occurrence of an insured event.

If you have lost your ability to work, you must provide:

• Certificate of establishment of a disability group.
• Documents confirming the establishment of a disability pension.
• Certificate of diagnosis with a description of the causes of disability.
• Certificate-extract from the medical card.

Mortgage insurance: cost

The risks that the creditor bank obliges to insure the borrower are subject to certain rates.

Apartment insurance will cost 0.3-0.5% more if the object is real estate itself. At the same time, the interest rate depends on the material of the floors, the technical condition of the house, the nature of the decoration of the premises and other similar points.

The cost of life insurance for the borrower depends on his type of activity, age, health. As a rule, the interest rate on life insurance is no more than 1.5%. Also, the bank has the right to demand to insure the income of the borrower.

The rate for title insurance is no more than 0.7%.

If you sum up all insurance costs when applying for a mortgage, then their share will be about 2% during the year of the residual value of the loan. These payments must be made once a year. Gradually, they decrease in proportion to the debt of the borrower to the bank.

Is it possible to refuse?

You can opt out of home loan insurance. In this case, the bank will require the borrower to return the amount of the debt, which is provided for by the agreement.

If insurance is issued at a bank, most likely the borrower will overpay a large amount. In this case, the insurer can be chosen independently. It can also be changed if needed. You should choose reliable, reputable organizations for which large payments are common.

Mortgage insurance: Sberbank (features)

Sberbank is one of the key players in the housing lending market. During the mortgage procedure, he uses his own insurance system.

Sberbank considers mortgage insurance as an additional service. Moreover, if the borrower refused it, then the interest rate on the mortgage immediately rises by 1%. The presence of insurance is not a prerequisite for issuing a loan.

The insurance policy can be terminated only at the request of the client. To do this, you need to submit an appropriate application, and it will be considered within two weeks.

If the borrower is already insured by another organization, his policy must meet the conditions:

• The policy must insure life and disability.
• The policy must cover the repayment period of the home loan.

Sberbank has set the following rates for insurance:

• 1.99% - life and health;
• 2.5% - life and health with a choice of additional conditions;
• 2.99% - involuntary job loss.

Main advantages and disadvantages

The main disadvantage of mortgage insurance is the cost of the contract. Title insurance is issued for 3 years. Life and health are insured for the entire period of payments, the maximum period of which can reach up to 30 years. Therefore, the amount of payments is quite large. The final cost of housing increases by the amount of insurance payments. If the borrower refuses insurance, the bank may impose additional payments on him, including an increase in the mortgage rate.

The benefits include:

• In case of insured events, the insured pays the borrower's debts.
• The borrower's family members will not repay the premiums.
• Low probability of property loss.
• Mortgages can be repaid even if there are health problems.

Thus, compulsory mortgage insurance is beneficial for both the borrower and the lending bank. Since the housing loan agreement has a rather significant period, risk insurance allows you to protect yourself from unforeseen circumstances.