If you intend to contract a mortgage loan and you wonder if it is necessary to contract a life insurancethe answer is no. And it is that, as is clear from the mortgage law in force since June 2019banks cannot force customers to contract this type of product to request a mortgage and it is the customer’s decision to contract or not the products offered by the bank.
In fact, years ago the contracting of related products was mandatory and the banks took advantage of this legal loophole to increase their profits, forcing clients to take out insurance to obtain the necessary loan to purchase the home in which they were interested.
This is how life insurance works on a mortgage
Although life insurance is not essential to contract a mortgage loan, you may be interested in contracting it. This type of insurance it is used so that those you want receive an amount of money in case of death or for you to collect it if you add coverage for absolute permanent disability.
In the case of associate life insurance with a mortgage, the issuing entity of the loan will receive the capital since the objective of the insurance is to pay the mortgage debt. Thus, life insurance works as a guarantee so that, in the event of death, heirs not to bear the cost of the mortgageor yourself if you have added coverage for permanent or absolute disability.
Can I cancel life insurance?
When asked if life insurance can be cancelled, the answer is yes. This insurance is renewed annually, so it is convenient to notify the bank with at least one month in advance to the renewal so that the bank can make the cancellation effective.