Mortgage credit: Do I have to accept the life insurance that the bank imposes on me?

Just need to hire life insurance or housing credit and don't want to read everything? Contact us now to help you directly. If you want to know the answer to the most frequent questions on this topic: keep reading the article.

Am I required to take out life insurance with a home loan?

When you take out a home loan, banks require you to also take out life insurance. But the most common question that arises is: By law, are you required to take out this insurance when contracting the credit?

The answer is no. By law, it is not mandatory to have a life insurance to be able to contract a housing loan. But is it possible to contract a mortgage loan without life insurance? Also no. Banks do not allow you to proceed with the housing loan if you are not protected by this insurance.

In other words, the correct word would be: insurance is required, not mandatory. Why? Because it is a way for banks to protect themselves from the risk of default by customers, in the event of an accident that disables the borrower from earning income and paying off the loan, or even in the event of death.

If a customer has a life insurance policy with coverage for Total and Permanent Disability (TPD), Total and Permanent Disability (ITP), and death, in the event of any of these events occurring and the insurance is activated, the bank receives the outstanding loan amount from the insurer. Therefore, the loan is repaid and the family is relieved of this burden.

Do I have to get insurance from the bank's insurance company?

As a rule, in the proposal that banks suggest initially, it is proposed that the life insurance required for the home loan be carried out with the insurer associated with the bank. This is because, if you choose to take out insurance within the bank, the bank may offer better conditions on the loan, such as a bonus on the spread (one of the loan rates).

However, you should know that, by law, you are not required to purchase insurance from the bank's insurer. In this case, you cannot even be required to do so.  

According to the law, the customer can seek the life insurance solution that best suits them. Therefore, they can choose the insurance company that offers them the best conditions.

However, be aware that the bank can change the conditions of the housing credit proposal if you choose life insurance from another insurer.  

In this case, you should always do the math: even if the bank penalizes the value of the spread, increasing the monthly installment that you will have to pay for the credit, the amount you will save by hiring life insurance with a different insurer may compensate.

Therefore, always evaluate which scenario is most rewarding before making any decision. Consider factors such as savings, as well as your own needs and preferences, and those of the family unit, if applicable.

If you need help on this topic, Minute Savings can follow your process in a personalized and free way. Don't worry about bothering: we are here for that. We make hiring insurance and credits as simple as possible.