Is life insurance required when insuring a car?

Any banking structure that provides mortgage lending to individuals strives to protect its funds from unforeseen situations and minimize the risk of loss. Therefore, they offer all their borrowers who receive financing for the purchase of residential real estate to take out insurance for the property and health purchased on credit. If the first type of insurance is mandatory when concluding an agreement with almost any bank, then it is quite possible to refuse life and health insurance for a mortgage.

However, should this be done? After all, a mortgage is usually issued for a long period, during which various health-related troubles may occur to the responsible borrower. In the absence of an insurance contract, even complete loss of ability to work will not relieve the client of responsibility; his obligations to the bank will remain in force despite the impossibility of paying contributions. And if an insurance policy is purchased, then financial responsibilities will fall on the shoulders of the insurer.

On the other hand, if the client is ready to enter into a life insurance contract, the bank will be more willing to issue a loan (even in some cases make concessions), since there will be confidence that financial interests will be covered by insurance. It turns out that life insurance for mortgage lending is a mutually beneficial procedure.

What does insurance protect against and what does insurance provide?

Mortgage life insurance will provide financial compensation in the following situations:

Temporary loss of ability to work. This clause is specified separately in the insurance contract. In this case, payments are provided for the period of the client’s incapacity for work in the full amount of insurance premiums or in part.
Obtaining disability of I, II groups. In this case, the amounts of regular contributions are revised based on the nature of the disability, degree of ability to work, and the actual amount of income of the borrower. The difference between the final payment amount and the initial amount specified in the mortgage agreement is paid by the insurer.
Death of the borrower. The entire remaining amount of debt is paid by the insurer in full, the mortgage debt is fully repaid, and the property becomes the property of the legal heirs.

Despite the utmost clarity and transparency of the insurance contract, many clients who are faced with the task of taking out a loan to purchase real estate for the first time refuse to purchase a policy. This is usually caused not by a lack of information about what such insurance protects against and what it provides, but by the desire to save money. After all, in addition to regular mortgage payments, you will also have to pay annual insurance.

Therefore, in response to the most frequent remark of such thrifty borrowers: (why do I need life insurance?), the following arguments can be given:

The insurer will assume the obligation to repay the loan (in part or in full).
Neither the bank nor third parties will claim the property, and the relatives of the responsible person will not be subject to an unbearable debt burden.
And most importantly, you can count on a decrease in the interest rate on your mortgage loan. In other words, the bank reduces the amount of payments by an amount almost equal to the borrower's costs for insurance. The only thing to consider is that mortgage payments are usually made quarterly or monthly, and insurance premiums in most cases are paid once a year, so you should prepare the required amount in advance.

What should you do when the insurer refuses to sell compulsory motor liability insurance without life insurance?

If you decide to defend your rights and not buy additional services from the insurer, then you will have to be patient and start taking action. Currently, there are several variations in the development of events:

You say that you will not insure life, and if the insurer refuses to sell you car insurance without this service, demand that you state the reason for the refusal, preferably in the presence of third parties, or record the conversation, or ask them to justify the refusal in writing. After this, simply do not use the car and file a claim in court against the insurance company in order to protect your rights. You will need to attach to your claim all evidence that confirms the insurer's refusal. After that, you wait for the court's decision. As a rule, this process takes an average of 2-3 months. But during this time, you will be able to receive payment from the defendant for moral damages, since because of him you had to travel by public transport, and not in a comfortable car. The process, of course, is difficult, but the payments that you will subsequently receive will be able to cover your expenses, and besides, the insurer will have to conclude a car insurance agreement with you without including related services.
If the insurance company refused to issue you a compulsory motor liability insurance policy without additional life insurance, then you will need to contact Rospotrebnadzor, which will help take appropriate measures and restore your rights. It is important to know here that insurance is one of the types of services provided in Russia. For this reason, the insurer will have to respond in accordance with the PPA. This means that you can not only terminate the contract with the insurer, but also demand compensation from him for the damage caused.
You buy an MTPL policy along with additional services. Then, two or three days later, you visit the insurance company’s office again and close the contract for the provision of services, giving the insurer part of the insurance premium as a penalty. But in this case everything needs to be calculated. If the percentage that the insurance company wants to receive for terminating the contract is approximately 50% of the cost of the imposed service, then it is worth thinking about whether it is necessary to refuse insurance?

How is the insurance amount calculated?

The amount of insurance can be determined based on the full value of the property purchased with a mortgage, or the insurance contract can be concluded for the loan amount. In the second case, the policy covers 70-80 percent of the full price of the property, since mortgage schemes usually provide for a down payment of 20-30% of the appraised value. This is a general situation; the final price of insurance is also determined by many other factors:

Borrower's gender. As practice shows, insurance cases happen to women less often, so the policy will cost them a little less.
Profession. Some types of professional activities are accompanied by significant risks to life and health, so representatives of dangerous professions and people working in hazardous conditions will have to pay large amounts of insurance premiums.
Extreme hobby. If the borrower is interested in hang gliding, parachuting, diving, or other activities associated with an increased risk of serious injury, this will also have an unfavorable effect on the amount of contributions.
Age. The older a person is, the weaker his immunity is, and he is more susceptible to external adverse factors. This means that insurance will be more expensive for older people.
Health status. In the process of concluding an insurance contract, the client is asked to provide reliable information about existing chronic diseases and indicate height and weight parameters. In case of severe illness or excessive deviation of height and weight indicators from the norm, indicating dystrophy or obesity, the policy will cost more. And if false data regarding health is revealed, the borrower may be denied insurance payments.

Most insurance companies offer health and life insurance in the amount of 0.5-1.5 percent of the total loan amount (or the estimated value of an apartment or other real estate purchased with a mortgage).

Principles

The principles of life insurance are:

Insurable interest. For this type of insurance, the policyholder must have an interest in his own life. If such a service is offered to an employer, then he must have an interest in preserving the health and life of employees, a spouse in the life of the other half, a parent in the life of children, and a creditor in the life of the debtor.
Financial interest. To insure someone's life, the policyholder must have a monetary interest in the life of the insured person. The amount of insurance should not be higher than the quantitative assessment of this interest.
Relationship between the beneficiary and the insured person. According to the insurance contract, the policyholder has the right to appoint any insured person as a beneficiary. At the same time, he also has the right to replace this person with another before the occurrence of the insured event.
Bonus registration system. For annual output, the insurance company accrues a bonus paid to the policyholder. The bonus can be used to increase the sum insured under the contract or to reduce insurance premiums.
Possibility of obtaining a loan. Endowment insurance has the ability to provide a loan on preferential terms. Its maximum amount is not higher than the insured amount under the contract.
Surrender value of the policy . Endowment insurance is attractive because there is always the possibility of early termination of the service. In this case, the policyholder receives a redemption amount, which includes the current cost of the policy, which the insurer is able to pay to the person terminating the concluded contract.

You can count on the redemption price after the second year of the contract. Every year the amount increases and is equal to the insurance value specified in the contract at the end of the insurance period.

How to get an insurance policy

Borrower insurance is carried out in two ways. A bilateral agreement can be concluded at any time: before taking out a mortgage loan and after. In the second case, the client can submit an application to the bank to revise the interest rate, thereby reducing the amount of regular payments in accordance with the amount of insurance premiums. However, this will oblige the borrower to renew the policy annually until the mortgage agreement is terminated and the property becomes his full property.

The tripartite agreement is concluded simultaneously with the loan registration. In this case, the stakeholders are the bank, the client and the insurance company. In this case, the borrower also gets the opportunity to pay premiums at a preferential rate and is obliged to extend the validity of the insurance contract for the entire loan period.

When taking out a life and health insurance policy, most insurers offer clients to choose the most convenient form of payment. A standard insurance contract usually provides for annual payments equal to the interest rate on the balance of the loan amount. However, the borrower can choose other options by paying equal installments quarterly or monthly.

On the Prosto Insure portal you can choose the most profitable life insurance for a mortgage among popular insurance companies. To do this, enter the necessary data for the calculation on the calculator page.

Imposing life insurance in the VSK insurance house

I didn’t specifically choose the next insurance company, I just went to the first office I came across. It turned out to be the office of the VSK insurance house.

This insurance company also refuses to sell a compulsory motor liability insurance policy without a life insurance policy. Moreover, they don’t have any clever explanations. The manager simply says that he will not sell the policy. Refusal to conclude a contract is also not granted.

If any of the readers have a desire to “fight” with the insurance company, then feel free to go to VSK. Record the refusal on a video camera or voice recorder. After this, you can impose a three-hundred-thousand-dollar fine on the insurance company.

After visiting the second insurance company, it became clear that the imposition of life insurance when purchasing compulsory motor liability insurance has a noticeable scope . Therefore, it was decided to immediately go to the next insurance office with the voice recorder turned on. The office was again chosen at random, but the insurer turned out to be respectable and sold the MTPL policy without any problems.

Documents required for mortgage life insurance

To obtain a policy, the client must submit the following documents:

application in the form established by the insurance company;
completed application form;
a photocopy of the work book (all completed pages);
state-issued civil passport;
a loan agreement or a document certifying the estimated value of the property (apartment, part of it, house);
at the request of the insurance company - a certificate from an official medical institution about the state of health.

Procedure for insurance payments

When concluding a tripartite agreement, all financial issues in the event of an insured event are resolved practically without the participation of the client, between the insurer and the bank. The borrower is only required to promptly notify the parties to the agreement and, if necessary, provide documentary evidence.

If the policy was obtained without the participation of the bank, then the client or his heirs independently draw up insurance payments, which are transferred to the bank to pay off the debt on the mortgage loan.

Recalculation in case of partial or full early repayment

The insurance contract is usually concluded for the entire term of the mortgage loan and provides for fixed amounts of payments, the amount of which can be reduced annually. If the borrower repays part of the loan ahead of schedule, he should contact the insurer about concluding an additional agreement. After the client provides documents from the bank certifying the remaining amount of debt, the amount of insurance payments for the remaining period will be recalculated. And if the long-term loan is fully repaid, the borrower can contact the insurance company with an application for the return of part of the amount of insurance premiums.

Another bonus that a client who insures his life and health receives is the opportunity to apply for a tax deduction (13 percent of personal income tax paid on wages).

Return of the imposed service

Companies do not have the right to force a client to purchase services that he does not consider necessary.
They are warned about this by the law on the protection of consumer rights, Art. 16, part 2. The Central Bank of the Russian Federation obliged insurers to register in any voluntary insurance contracts; the decree is valid from March 2, 2016.

Within five days, you must contact the insurer with a written statement of your desire to terminate your life insurance. You can get a full refund if you terminate the voluntary insurance contract within 5 days.

The following details must be taken into account:

Submit an application during a personal visit to the company, and not by mail - to strictly adhere to deadlines.
Make sure that the secretary puts the company stamp and the date of acceptance of the application on the copy of the application. Then there will be confirmation that the letter has been received by the company.
Attach copies of documents confirming the transaction - policy, check.
Leave the owner’s full bank details and contact phone number.

If the contract does not indicate that the company is obliged to return the paid insurance premium upon termination, then, most likely, instead of money you will receive a refusal. It's worth a try, but before doing so, carefully study the terms of termination.