HOW DOES MORTGAGES LINKED TO INSURANCE

 The risks associated with a mortgage are unlikely but, if they occur, really harmful. To cushion this blow, there is mortgage life insurance, which comes into play when the life of the insured is cut short by death, illness, disability, unemployment, or other circumstances. We tell you how this insurance works and what are its main data in Spain:

Mortgage Life Insurance, How Does It Work?

In the last fifteen years, 1,750 people or families, each day, have decided to start the process of acquiring a home through a mortgage loan. Mortgage-linked insurance is there to protect the insured's assets in case their life goes wrong. There are people who die unexpectedly, at an early age or even very early; And if they are supporting the repayment of a mortgage loan, this death poses a very serious problem for the family, which, on occasions, no longer has the capacity to meet the loan commitments and, consequently, places itself in danger of losing the House. This problem is the one solved by life insurance combined with a mortgage, which acts in two key moments:

1. In the event that the income of the person who contracted the loan is in danger: the payment protection coverage assumes the payment of the mortgage for a time due to the interruption of the income, for example, by becoming unemployed.

In this way, life insurance combined with a mortgage protects the assets of the person and often also of the family unit, which is not burdened by the need to meet the needs of the loan. In fact, you are protecting your own possession of the house, avoiding with the payment that you lose the house.

The life insurance combined with mortgage acts as an anti-eviction tool by protecting the assets against non-payment in the event of death or serious illness

2. In case of death or illness: the insurance will be in charge of paying the outstanding monthly payments of the person responsible for paying the mortgage in the event of death, long illness or disability.

Mortgage Insurance Statistics

In Spain, there are approximately 3.3 million people or families who are paying a mortgage and are covered by this type of insurance. Last year, 4,650 of these people encountered the misfortune of a death or premature and unexpected disability that prevented them from continuing to meet their loan commitments; but they had the insurance protection to avoid the loss of the house. On average, those payments were about 28,000 euros or, if you prefer, 1.2 times the salary for the entire year of an average worker.

Mortgage-linked life insurance did its job primarily among relatively young people; It is logical since older people usually have already finished paying their loans, which is why it is less common that they are still protected by this type of product. More than 40% of the people who came to the aid of whose families the insurance came last year were under 55 years of age.

Mortgage combined life insurance is insurance that is often talked about in critical tones. However, it performs essential social work. Any family member who has suffered the misfortune of the loss of a family head can confirm this.