Life insurance for a mortgage is mandatory or not?

In our time of great political and economic turmoil everyone is trying to protect themselves and their capital. Not an exception and banking institutions. This is especially true for long-term loans and related risks. One way to save bank investment is insurance. For long-term loans, in particular housing, is characterized by a way to deal with risks, such as life insurance for mortgages.

Argumentation of the conclusion of insurance contracts

There is no absolute need for this product at the stage of concluding a mortgage agreement, but any bank sharply negates such conclusions, therefore the chances of obtaining a positive result from the client without insurance are tending to zero. This position is conditioned not by the bank's attempt to squeeze out the maximum amount of money from the client, but by an attempt to protect investments. Since high mortality and negative social processes repeatedly increase the risks of non-return of loans.

Therefore , the life insurance contract , albeit behind the scenes, is a prerequisite for obtaining a positive result with respect to a mortgage. The form and content of the contract may differ dramatically depending on the chosen or recommended insurance campaign.

The necessity of life insurance for clients of banking institutions

As a rule, the life insurance contract is not with the bank, but with companies aimed at working with the risk of non-return of borrowed funds. Therefore, banks often conclude contracts on mutually beneficial terms and send their clients to specific companies. The need for such a relationship is due to the following:

- in the event of an insured event related to health, the insurer shall pay for the customer;

- in case of death of the borrower, there is no need to wait until relatives enter the right of ownership;

- with the loss of the client's solvency there is the possibility of a six-month grace period.

Therefore, life insurance for a mortgage is one of the indispensable conditions for the conclusion of a loan agreement.

Covering the risks of non-return of borrowed funds by Russian banks

Many Russian banks, given the extremely volatile economic situation, have introduced into their charter a number of provisions regulating the procedure and conditions for issuing long-term loans. The request for social research "Mortgage, bank conditions" showed that most of today's banks have made a constant to get a positive result.

In connection with this situation, banks are forced to create their insurance structural subdivisions or enter into contracts with already proven insurance companies. Naturally, having incurred these costs, banks raise interest rates on long-term loans for their customers.

Mortgage insurance in Sberbank

Sberbank of Russia is the largest institution on the financial services market in Russia. Accordingly, this organization can offer the most convenient conditions for obtaining a mortgage. Life insurance for a mortgage is a positive factor for a positive solution to a client's appeal.

With long-term credit relations there is always a risk of unaccounted or force majeure circumstances. Therefore, there was a compelling need to create such an instrument as "Sberbank: mortgage, life insurance". This tool positively affects the number of satisfactory applications of residents of the country who want to issue a mortgage. In case of refusal, Sberbank reserves the right to raise and revise the interest rate of the loan. Given the minimum amount of lending, this percentage significantly affects the final value of the loan object.

Actual conditions for long-term lending to Sberbank

Given the fluctuations in the foreign exchange market, Sberbank sets the base rates for long-term loans. For example, at the moment the current rate is 14.5%, it is valid until 28.02.2015. If the client refuses to use the services of the Sberbank: Mortgage, Life Insurance tool, the rate rises to 15.5%.

But, in spite of all the nuances, in terms of the number of executed contracts, Sberbank occupies a dominant position in the market of long-term loans. Many clients mistakenly believe that if a mortgage is taken (Sberbank), life insurance is compulsory. These statements are not true, as Sberbank does not violate federal laws that specifically express the right to "non-compulsory life insurance in obtaining long-term loans."

Mortgage insurance in VTB

One of the most attractive banks in the market for long-term loans is VTB.

To minimize or exclude possible risks, some types of insurance liabilities have been introduced in this institution depending on the term, type and amount of the loan. A potential client before choosing the type of loan and contacting an employee of an institution is required to familiarize himself with the following document: "Mortgage: bank conditions" in order to feel the difference and choose the optimal form of treatment for yourself. This document gives an opportunity to see all the advantages of a VTB mortgage, and also acquaints a possible client with the VTB: Insurance system.

Features of VTB mortgage

VTB specialists have developed a long-term loan insurance system, which includes the following products:

- impossibility of mandatory contributions due to loss of efficiency of the borrower;

- impossibility of mandatory contributions due to the death of the borrower;

- impossibility of mandatory contributions due to damage or loss of collateral;

- impossibility of mandatory contributions due to restriction or termination of ownership rights to the object of the pledge (within three years).

Without the conclusion of a contract with VTB "Mortgage: life insurance" by the borrower, the purpose of the loan becomes practically unattainable. In order to make this product the most profitable, VTB offers comprehensive insurance, which includes the following risks:

- fire;

- natural disasters;

- consequences from a lightning strike;

- the consequences of the explosion of domestic gas;

- consequences of water damage;

- consequences from the fall of flying objects;

- the consequences of illegal actions.

When providing evidence of any of these conditions, the program provides for compensation in full in real terms. If the compensation exceeds the amount of outstanding obligations, the difference is paid to the borrower.

The cost of life insurance for mortgages

The cost of life insurance for a mortgage depends on many factors, but, as a rule, does not exceed one and a half percent of the final cost of the loan object. The formation of value is affected by:

- Sex (as women live longer than men, the interest rate for them is less than for men);

- age category (the age limit is from twenty to seventy years, for military - up to 45);

- the state of health of the borrower (hereditary and chronic diseases can become an insurmountable barrier in obtaining a mortgage);

- the risk of obtaining work-related injuries depending on the nature of the activity;

- hobbies (hobbies dangerous sports negatively affect the interest rate).

In modern realities, life insurance for mortgages becomes one of the most important factors in the relationship between banking institutions, insurance companies and clients wishing to obtain long-term loans on individual and mutually beneficial terms. Therefore, if a mortgage is formalized, life insurance is compulsory. After all, this is beneficial not only for banks, but also for borrowers.