Some of the most important loans that are contracted throughout the life of an average citizen, such as mortgages . Or those related to the purchase of a new vehicle or access to education , usually come accompanied by insurance for loans . Having insurance of this type provides several advantages and disadvantages. The cost of applying it makes the final amount of the loan more expensive, although on the other hand it provides security in the same way that other products do, such as life insurance .
What is loan insurance?
Loan insurance allows the insured's family members to be exempt from the rest of the loan payment; in case of death or invalidity of the holder . They fall within the category of life insurance, and their characteristics are similar to those of these. Well, these cover the risks that may affect the integrity or health of people .
Having this product will guarantee the payment of the debt, in addition to protecting the family members. So they will not be responsible for dealing with it in the event of any of the aforementioned circumstances.
When making the sale of a home, the mortgage loan contract is also made; in which you will find the possibility of opting for the insurance policy . Some banks may even require you to be hired in order to grant it, since it involves less risk for the financial institution.
How much loan insurance is there?
There are mainly two types of loans with these characteristics:
annual renewable payment protection insurance
In the first place, the annual renewable payment protection insurance , or according to its acronym, TAR . Your premium is paid annually, and it covers death and disability guarantees.
Payment protection insurance with a financed single premium
On the other hand, the second type of loan with an insurance policy is the payment protection insurance with a financed single premium , or also known as PUF . Your premium is charged in full when launched, and is added to that of the loan itself. Covers situations such as death, unemployment and temporary work disability.
Is it mandatory to have insurance for the loan?
Loan insurance is not mandatory under any circumstances. However, it must be admitted that banks are insistent on clients to hire them. In some entities, they could implicitly deny the granting of the loan for not having opted for the insurance.
That said, it is really advisable to have insurance of this type. Since many loans become part of the life of the borrower for many years. Therefore, in the event that any incident occurs that entails the inability to work and provide the necessary funds for the payment of the loan; the family would not suffer from this sudden lack of money. In Ideal Loans you can consult different financing options with and without insurance.