Can I change the life insurance associated with the housing credit?

How can I save by transferring my home life insurance policy?

Yes, it is possible to change the life insurance associated with the housing loan. Many people do not know, but they are not required to maintain the insurance they initially contracted with the bank where they took out the loan. In fact, the change can bring significant financial benefits.

In this article, we explain how life insurance exchange works, what the benefits are, and what to consider before making the change.

Is life insurance mandatory for home loans?

Banks require life insurance as a condition to approve a housing credit. This insurance ensures that, in case of death or disability of the loan holder, the debt to the bank will be paid off.

Although insurance is required, there is no law forcing you to contract it with the bank where you requested the credit. However, many banks impose this insurance as part of the loan agreement, sometimes with high premiums.

So, transferring the life insurance associated with the housing credit can bring financial advantages and greater flexibility, such as:  

• Significant savings: Many insurance companies offer lower prices than banks' associated insurers, which can reduce the monthly installment.  

• Best coverage: You can find insurance with better conditions, such as more comprehensive coverage for serious illnesses or disabilities.

• Flexibility in payment: Some insurers allow different payment methods (monthly, quarterly, annually), while banks may have stricter rules.  

How to transfer life insurance?

If you have a home loan with life insurance and want to change insurers, follow these steps:  

1: Compare offers from other insurers  

Before canceling your current insurance, research the market and request quotes from other insurers. You can ask for help from an insurance mediator who handles everything for free. In the proposals, evaluate:

• The prize (amount to be paid for the insurance);  

• Coverages included (death, total and permanent disability, total and permanent disability);  

• Conditions of the contract.

2: Confirm if the new insurance meets the bank's requirements.

The bank requires that the life insurance have the minimum mandatory coverage to guarantee the payment of the loan in case of accident. Make sure the new policy meets these requirements.

3: Inform the bank of the intention to transfer.

Send to the bank the formal request for the replacement of life insurance and present the proposal for the new insurance. The bank cannot refuse the change, as long as the new policy meets the requirements.

4: Cancel the old insurance.

As soon as the bank accepts the change, formalize the cancellation of the previous insurance to avoid paying for two insurances simultaneously.

Can the bank penalize my credit for changing insurance?  

Banks often offer a lower spread to those who keep life insurance with them. Therefore, when changing insurance companies, they may slightly increase the spread of the mortgage credit.

However, even with this change, in most cases the savings in insurance greatly outweigh the increase in spread. Before switching, calculate to ensure the new option is more advantageous overall.

Transferring mortgage life insurance usually brings financial benefits. The key is to research well, compare options, and ensure that the new insurance meets the bank's requirements.

To do so, you can seek help from experts who will assist you in making the calculations and analyzing all conditions to ensure that with this change you achieve significant savings. This is because it is possible to save hundreds or even thousands of euros over the loan just by changing insurance companies.

Contact the insurance mediators of Poupança no Minuto who, at no cost, handle all the bureaucratic part and communication with the insurance companies! Or simulate directly the new insurance, in this simulator: