They offer me insurance combined with my mortgage loan. What do I have to look at when hiring it?
12/12/2024
We need to know that together with the mortgage there is only mandatory contracting insurance, which is fire insurance. In addition to this, entities can impose the subscription of insurance that guarantees the payment of the mortgage, for example, life insurance, but they are obliged to accept that you subscribe to your insurance with the insurance company of your choice. In any case, it is important to examine some data in order to make a decision. Thus, it is interesting to identify, for example:
- The mode of payment. It is essential to know if it is a single premium or periodic payment (usually annual) to understand what we are committing to. If you want to know more about single premium insurance, you can check it out hereAbre en ventana nueva.
- The real cost of insurance. In the pre-contractual information provided by your entity, the cost of each insurance must be shown along with the difference between hiring your loan with a bonus and without it. To compare the cost of different insurances you must take into account that, if the entity offers you bonuses for the contracting of the insurance, its real cost will be the cost of the premium minus the bonuses. If you decide to take out compulsory insurance with a different insurer, you will not be able to benefit from the bonus.
- It is also important to assess whether the coverages offered are adapted to our specific needs. Insurance with insufficient coverage does not serve us and one with excessive coverage will mean the payment of a higher premium. Thus, it is necessary to independently compare the offers of the entity with those of the insurance market. Take your time to study the coverages and analyze if they adapt to your circumstances.
- Remember that you have 30 days from the hiring to withdraw from the insurance if after signing it you come to the conclusion that it does not suit you or you find a better offer.
Is that all or should I consider something else throughout the life of the loan? As it is normally a long-term contract, many changes can happen in the market, in the regulations and in the personal circumstances of each client, and we must consider those elements that can affect us in the medium term.
For example, a combined product may be cancelled for reasons beyond the borrower's control. To avoid the loss of the bonus enjoyed by the customer, the entity must offer a bonus product similar to the canceled one.
Keep in mind that if you amortize the loan early you will have the right to also cancel the insurance that had associates and to obtain the return of the unused premiums (the so-called return).
It is also advisable to review the calculations periodically, to assess whether it is worth continuing with the insurance or changing insurer. As long-term contracts, it is reasonable to think that the insurance market will change over time and that insurance can be found that better meets the needs of customers. Also, as part of the debt has been amortized, the effect of the bonus is less and perhaps that is why the entity's insurance offer loses attractiveness. If you decide to change insurers, check with your entity beforehand what are the necessary procedures, deadlines and requirements of the new insurance to be able to make the change effective.
“Disclaimer: Please note that this is a translation of the original in Spanish that has been obtained using eTranslation (the machine translation tool provided by the European Commission), with the intention of giving you a basic idea of the content in English until a human translation becomes available. The Banco de España accepts no liability whatsoever in connection with this translation.”
