Life insurance: associated with home loans

Life insurance associated with a mortgage loan, although not mandatory by law, is an additional protection mechanism for the insured and the credit institution. In most situations, it is a mandatory condition for approval of the respective loan.

What life insurance are we talking about?

It is usually contracted at the request of the bank to guarantee the mortgage loan. As a rule, life insurance covers the risk of death of one or more insured persons, but it can also include additional coverage for the risk of disability, accident or even unemployment.

The importance of life insurance?

There are risks that have serious consequences and a major economic impact on consumers' lives. To minimize the impact of some risks, banks ask consumers to take out life insurance, so that in the event of a claim, they are protected by the insurer.

Thus, life insurance appears as a guarantee for the family that intends to take out a mortgage, but it is often interpreted as just an additional cost associated with the loan.

You can choose the insurance company

According to the law, you can always take out insurance with an insurance company of your choice, but many banks present a proposal and, in return, reduce the spread (bank profit margin) associated with the loan. Therefore, it may be worth opting for the proposal presented by the bank. Do the math and ask for a simulation of the payment with the insurance proposed by the bank and another without including the value of the insurance.

The exercise will not be as easy as it seems, you must take into account the projection of premiums to be paid during the term of the home loan.

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