What to do when the life insurance beneficiary is the bank? - InsuranceRise

Tuesday, 6 September 2016

What to do when the life insurance beneficiary is the bank?

Most financial institutions require hiring a mortgage life insurance and often advised, if not require, the bank listed as a beneficiary in the event of death or disability of the insured. Life insurance linked to mortgage is highly recommended not to leave burdens on heirs and to facilitate procedures if necessary. Moreover, in case of hiring, they can contract with the bank or insurer that each considers best.

However, we should remember that when life insurance is hired, the policyholder may designate beneficiaries. If you hire a mortgage life insurance that does not cover more than the outstanding mortgage principal is very useful to be designated as beneficiary to the bank to make himself who is responsible for managing the payment of compensation.

Overall, hiring a life insurance linked to mortgage aims to satisfy the mortgage debt holder in the event of death or disability. As the debt is decreasing protected as they are paying the mortgage payments, some banks offer the option of hiring a mortgage life insurance decreasing capital. Thus, as the premium is proportional to capital to cover the total cost reduction will be reduced.

For cases where the mortgage life insurance is contracted with the bank can choose to make a full payment of insurance and included in the monthly mortgage. This option can increase the quota between 10 and 30 euros on average each month.

It is important to stress that is not mandatory to have contracted life insurance with the bank so it is highly recommended to compare what is being paid with market prices as half - life insurance offered by the bank is 50% more expensive than offered by PuntoSeguro.com

When hiring a mortgage life insurance, if the bank as beneficiary is designated, make sure that it is recorded that the loan amount will be limited to debt corresponding to the holder and will be used only and exclusively for amortization of such debt.

If the bank is the beneficiary, in case they have contracted additional coverage in life insurance linked to mortgage or the sum insured exceeds the debt, the heirs will have to claim from the bank for it will pay the difference .
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