With a high volume of long-term loan, a sudden death can be a major financial burden on relatives.
Good if the borrower has taken out a death insurance for this case. A mortality cover insurance is a form of term life insurance. It occurs when the borrower should die before he has fully repaid the loan . Instead of the relatives, the insurer pays the outstanding amount. Unlike a full residual debt protection, it does not pay for incapacity and unemployment and is therefore much less expensive. Therefore, pure mortality protection is more recommendable than a full residual debt insurance . But is mortality protection when borrowing really necessary and are there profitable alternatives?
Mortality protection is often mediated aggressively
Especially in the context of zero-percent financing or real estate loans is often trying to provide a fatality cover or a complete residual debt protection. Through the mediation, however, horrendous fees are often due, which drive the entire installment loan together with the cost of the insurance in the air. There is often pressure on the consumer: Without credit insurance, there is no credit , so the motto of many providers. Therefore, the potential borrower on site should not be persuaded to premature conclusion of contract and check the offer at home on his integrity. Only then should an informed decision be made.
Significantly cheaper than a residual debt insurance
A residual debt insurance is in the opinion of consumer advocates almost always unnecessary . For the protection package from death, incapacity for work and unemployment, the borrower pays about 10,000 euros for the remaining debt insurance with a volume of 57,000 euros. This results in a calculation of law professor Kai-Oliver Knops In case of a pure fatality insurance only a fraction will be due for insurance premiums of 350 Euro over the entire term. Even those who pay a total of 500 euros in premiums for mortality insurance only have to pay 5 percent of the money for a residual debt insurance. In the direct financial comparison of the two additional forms of life insurance, mortality protection is clearly ahead.
Mortality protection can make sense when buying a home
Like residual debt insurance, it is not recommended to cover death on smaller investments such as a computer or a sofa. These are usually not acquisitions that could threaten the financial existence of the relatives. A mortality protection only ensures that the loan becomes more expensive and longer pay off. Significantly more meaningful is a mortality protection for a car financing , but especially in the context of a real estate financing .
An example is a family that finishes a loan of 100,000 euros and 20 years to finance their home. She chooses a large repayment to settle the debt as quickly as possible. After ten years, however, the husband dies, who has not completed any additional life insurance. Now the widow would have to repay the other good 60,000 euros alone without a mortality cover under the loan.
Compared to these costs, insurance for death is only a fraction. According to data from financial test for mortality hedge about 0.8 to 1.7 percent of the credit volume must be scheduled. Specifically, the most expensive Anbeiter R + V was with 1,704 euros more than twice as expensive as the cheapest company Ontos with 816 euros, which are incurred extra for the death insurance. However, this model example is designed for a 35-year-old and solvent borrower. Those who are less solvent or healthy must reckon with higher amounts. Nevertheless, a comparison of the costs and benefits of mortality protection should be made.
Beware of the fine print
Before concluding the contract, however, the contents of the agreement should always be reviewed critically. The providers like to praise the benefits of a death insurance, but do not point out disadvantages. The small print often lurks hidden power exclusions, which have a decisive effect in the event of damage. Suicide is often not included in the coverage. And who at the time of the contract already suffers from the disease, which is later responsible for the death, receives from many insurance companies no money . Such offers may still be acceptable for healthy people, but especially chronic patients or people with a long medical record is in any case discouraged by such a death insurance. It should also be examined after which period the fatality cover comes into effect. Immediately after the conclusion of the contract, the protection is not yet effective.
Independent life insurance remains the first choice
Although they has set out the benefits of a fatality cover, it considers such protection in the context of a loan only a second choice. Not only does she receive the special loan, she also pays the partner or the entire family. Therefore, comprehensive coverage of deaths always makes sense if the policyholder earns a large part of the entire family’s livelihood. If the utility’s income goes away, children or partners are quickly faced with financial problems. Who already enjoys the protection of a term life insurance, logically requires no fatality in a loan. Anyone who can not afford such a policy or is excluded due to pre-existing illnesses, has the possibility of partial coverage with a mortality protection for an important credit.