In recent years, we have been observing how before a mortgage loan we are required to take out a life insurance policy. Not to mention other additional obligations, of course (home insurance, direct debits, pension plan…). Today we will talk about whether the capital contracted in this life insurance is sufficient or whether we may need to supplement it.
Mortgage-linked life insurance
When we apply for 200,000 euros to buy a house, the bank obliges us to take out a life insurance policy to protect our backs. It is possible that, if it is a couple, both insure 200,000 euros or each one only half of it.
In any case, contracting it with the bank normally implies a bonus on the interest rate applied to us. We have already seen, recently, that there is no such obligation to contract the insurance with them. At the same time, it is cheaper to take out life insurance with a brokerage firm than with the bank (this has even been recognized in the CincoDías newspaper, and appears in independent studies).
Is this coverage sufficient?
This question requires analyzing each case separately, because the casuistry is infinite. A family with two children is different from a young couple with no offspring.
We, when we meet with clients who need information about their life insurance principal, we talk about:
- What family burdens exist
- What is their employment situation: are they self-employed, salaried, do both partners work, are they single?
- Whether or not they have more debts
The type of benefits offered by Social Security will depend on this and, depending on this, the need to supplement the mortgage life insurance.
We must consider that, with the life insurance that covers only the loan, we are covering the bank’s back. However, we are not responding to two of the purposes of the life insurance policy, as they are:
- that our family members have a capital to be received by us
- to compensate for loss of income due to death or disability of a family member
How do I calculate the life insurance I need?
In its day, we already made an article with the calculation of the capital of the life insurance, depending on the personal circumstances of each one, which we leave here.
If you need us to help you manage your life insurance, here we are. Call us or write us and we will be pleased to help you.
