Mortgage credit: Transferring life insurance can help lower the installment?

Want to proceed with the transfer of your mortgage life insurance? Contact the insurance intermediary Poupança no Minuto to request proposals from various insurers and help you choose the right insurance solution for you. Or read first, the positive impact that this transfer can have on your budget.

In mortgage credit, it is required to contract life insurance.

At the time of contracting a home loan, you are required to take out life insurance. However, you should know that, by law, this is not a mandatory product. But it is also not possible to contract a home loan without life insurance, as banks refuse to lend you money for a house if you are not protected by this insurance.

So, this insurance is required and not mandatory. This is because banks need a guarantee in case borrowers default on the loan. Therefore, in the event of an accident or illness that incapacitates the insured from earning income and repaying the loan, the insurer assumes this responsibility.

When hiring a life insurance, if one of the coverages is triggered ITA - Compensation for temporary absolute incapacity - , the insurance company pays the insured capital compensation to allow them to meet the mortgage settlement, leaving them and their family free from that burden.

By law, it is not mandatory to hire the bank's insurance company.

In addition, it is also not mandatory to hire the life insurance for the housing loan at the insurance company associated with the bank. By law, you can seek different proposals and proceed with the subscription of the insurance with another insurance company.

To hire from the associated insurer, banks can offer you better conditions (theoretically), such as a bonus on the credit spread. However, you should know that it may not be worth it compared to the savings that can be achieved with insurance contracted with another insurer.

According to the law, you can search for the insurance solution that best suits you, according to your lifestyle, preferences, and needs. You can even get cheaper insurance, and with better conditions, in another company other than the bank.

So, you should always look for several proposals and compare them with the bank simulation (even with a penalty on the spread), to understand which one is worth it.

Distinguish between ITP and IAD coverage

When hiring a life insurance, you must first be aware of the coverage you can access, to understand what you need. The most common, in addition to death coverage, are the Total and Permanent Disability (TPD) and Absolute and Definitive Disability (ADD) coverages.

So, get to know what both types of coverage mean before we move on to a practical example.  

ITP - Total and Permanent Disability

Not life insurance, Total and Permanent Disability (TPD) represents a coverage that can be activated if the insured person has a degree of disability equal to or greater than 66%, as a result of illness or accident.

This disability prevents the policyholder from carrying out their professional activity and continue earning income to cover their expenses. Therefore, with this active coverage, the insurer assumes the responsibility to pay the agreed sum insured in the contract.

IAD - Absolute and Definitive Disability

Total and permanent disability coverage equates to an incapacity equal to or greater than 80%, as a result of illness or accident.  

In this case, the disability corresponds to the "vegetative state", and the insured becomes dependent on others for vital needs.  

Activating the IAD coverage allows you to have access to the agreed compensation value with the insurance company, so that you can have a financially comfortable life, since you are unable to earn income.

In this sense, we can affirm that the ITP coverage is more comprehensive than the IAD coverage, as it covers a smaller and more common disability.

In practice, what is the impact of transferring insurance?

With a practical example, you may better understand the possible impact it may have on your wallet, a transfer of your life insurance associated with housing credit. This is especially the case when the insurance was done instead of the credit at the bank's insurance company.  

This is the case of a couple, aged 41 and 35, who turned to Poupança no Minuto's insurance mediation services to transfer their mortgage life insurance.

The couple had a home loan debt of 144,000 euros, with insurance contracted at the bank's associated insurance company, and coverage for Total and Permanent Disability (IAD), paying a monthly installment of 137.80 euros per month and 1,653.64 euros per year. It is worth noting that this couple did not have clinical pathologies, high-risk professions, pre-existing illnesses, or aggravations that could occur.

So, by transferring life insurance to a new insurer, with Total and Permanent Disability (ITP) coverage, this couple was able to get an offer in which they started paying a monthly installment of 22.26 euros, 267.12 euros per year, while achieving even greater coverage.

Note, then, that: The couple benefited from transferring their life insurance, considering the increase in coverage, and the savings achieved. The couple saved 115.54 euros per month, which results in an annual savings equivalent to 1386.52 euros.

Want to analyze your case? Poupança no Minuto handles everything! Contact us to understand if you can get a cheaper and better life insurance solution for you.