Using life insurance to secure a loan
Posted on May 8, 2017 by Marion
Banks make mortgage loan insurance offers. Any borrower is looking for the means to have a cheap mortgage. How to reassure the lender at the same time?
It can be done by focusing more on life insurance than on death and disability insurance.
Why use life insurance?
Using the life insurance contract is a great way to secure a home loan from a lender. The latter examines the quality of the file.
The lender assesses the risk of non-repayment based on a few parameters including financial capacity, state of health and age. A guarantee is required in the event of death and disability. The lender then offers insurance, with his establishment, to cover contingencies. If at the end of one year, the borrower is not satisfied, thanks to the delegation of insurance, he can go to another insurance house.
How to use life insurance?
To ensure obtaining credit, one must use life insurance to secure a mortgage. In other words, it's sidelining creditor insurance. How to do it ?
The borrower designates the bank as the primary beneficiary. This is possible by pledging or by delegation of debt. In the event of non-repayment of the loan for death and other disability, the legal mechanism is activated. The lender has the right to request a redemption of the sums due. At the time of death, if the loan is due, the lender will be the beneficiary of the loan balance.
What advantages does the delegation of debt offer?
The delegation of debt is free. It even allows the cost of credit to be reduced by an advantageous rate and to avoid paying the fees required by the use of a mortgage. The borrower invests in his savings effort and protects himself against all hazards.
The borrower should not forget that the life insurance contract generates interest and retains tax priority. Debt delegation allows savings related to death insurance.
Before placing the contract as collateral, it is recommended to secure the savings held in units of account through arbitrage in favor of the US dollar fund. It is good to always be accompanied by a professional insurer in the process.
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