Mortgage Insurance Policyhypothecary policy
One of the current types of policies used for this purpose is life insurance.
The purpose is to disburse the policy if the policy holder should die during the policy period. If you are applying for this kind of insurance, choose the duration of the policy, for example 25 years. People who seek to get coverage specifically for their mortgage due often opt for a declining denomination Life insurance policy, commonly known as mortgage insurance.
Insurance with a diminishing maturity is usually used to hedge the remaining amount of a redemption mortgage. If you have a redemption mortgage, your indebtedness falls with every redemption you make. Since your debts fall due, you may find that the amount of insurance you need will also decline. Declining concept insurance is aimed at ensuring this, and so the overall sum insured declines over the course of your lifetime, approximately in line with your mortgage.
When you take out insurance with a diminishing maturity to pay your mortgage liability, you should make sure that the maturity of your insurance policy is the same as the length of your mortgage - e.g. 25 years. While the amount you are insured against falls over the life of the policy, the amount of your premium remains the same.
Your payment would be significantly higher if you lost in the second year of the contract than if you lost in the twentieth year because you would have owed more to your mortgagee. Others are the same, a mortgage insurance policy tends to have lower premium rates than other insurance policies.
To what extent does it differ from tier-termoversicherung? We have another kind of joint risk insurance policy termed Tier 1 Life Insurance. The policy is quite simple - it is developed to disburse a lump sums if you are killed within the contract period. Irrespective of when it takes place, the payment is the same, and so the bonuses tended to be higher.
For more information, please refer to our risk insurance guidelines. A few things to keep in minds when taking out such a policy. A lot of individuals choose to prolong their mortgage life when they move or when they want to cut back the amount of their recurring payments.
It is important to make sure that the length of the contract period always coincides with the duration of the mortgage, so if your contract period changes for any reasons, speak to your insurance company about it. Their mortgage bank may try to offer you the insurance policy when you get your mortgage.
You are not obliged to buy from them, so take the trouble to check out our offers and find the policy that best fits your needs.