Buying a home or a property by means of a housing loan calls for financial discipline and multiple risks for the buyer. Since housing loan is a long term commitment and has definite financial implication in terms of long term budget, the buyer must consider the risks associated and try to cover them by means of a comprehensive insurance product such as MRI(Mortgage Redemption Insurance).
Life is full of uncertainties that often come as a surprise. As a responsible member of the family, we should consider all possible risks that may cause a financial burden on the members in case of an unfortunate incident. Protecting the monetary interests is best answered by insurance. Life insurance is a must have for any family. Along with basic insurance, products that provide cover for loans and other credit is a must. Imagine a situation where the family is burdened with home loan repayments in case something unfortunate happens to you !
Mortgage Redemption Insurance
An insurance product exclusively designed to provide monetary cover for home loan borrowers and their family members. It helps in settling the balance amount in unfortunate event such as death or TPD(Total or Permanent Disablement) of the borrowers involved in the loan. It pays off the outstanding, saving the surviving members from the burden of loan repayment.
To activate the MRI, the borrower is required to pay a one time premium and in most cases, it is incorporated in new home loan applications. This means, the borrower does not have to purchase a policy outside the loan. It is provided by the lender at the time of availing the loan.
Also Read: Housing Loan Refinancing
Features and Benefits of Mortgage Redemption Insurance(MRI)
The MRI provides covers for critical cases such as death or disablement. This benefits shields the family members from hefty payments, thereby covering them from unnecessary financial burden.
The borrower does not have to worry about running around looking for difference products from various insurers. The lender will make all the necessary arrangements for you to sign up for the MRI before the loan disbursal. Even if this is not provided by the bank, one can always look out for options outside the loan for comprehensive coverage.
One Time Premium
One does not have to worry about periodic premium payments since most of the MRI policies come with a one time premium payment. Get cover for the entire repayment term at nominal costs at the time of initiation. Some of the insurers also offer the MRI on the basis of annual renewable premium payments.
Since the MRI is associated with the housing loan that is being availed, little documentation is required from your end since all the paperwork is processed and provided by the bank to the insurer to aid the provision.
Why Do I need an MRI?
It's important not only because it covers the payments in case of a mishap involving the borrower but also because of the bare fact that the bank may decide to sequester the house from the borrower’s family to recover the outstanding loan amount if there is no cover available.
Having future loan payments covered also gives you a sense of security without having to worry about other means to cover the loan amount. It comes at a one time investment and provides cover until full repayment. Some of the policies may even cover situations such as loss of income due to job and so on. Do ask for a fine print of the coverage aspects and understand various components.
You may be initially hesitant to sign up for an MRI owing to shelling out a considerably high amount, but then you must consider all the benefits it offers for your family in terms of helping them to lead a respectable life in the future.
Some of the housing loan providers such as BPI in Philippines provide the Mortgage Redemption Insurance(MRI) at the time of availing the home loan. Most of the them are banks tie up with insurers to sign up for group MRI plan. Providers such as Ben Life and Philippine Prudential offer group schemes for MRI in the country.
Since housing loan is a long term commitment, insuring the repayment is highly recommended. Keep the following points in mind before signing up for the MRI.
- It's paramount to understand the payment terms to ascertain the affordability. It's always good to have a policy to with a one time payment commitment rather than paying year on year.
- Ensure the coverage amount is sufficient enough to cover all costs involved in the loan which includes prorated interest charges and other monetary aspects. The cover should be capable of paying off the entire loan amount.
- You don’t have to mandatorily sign up for a lender mandated MRI policy. Look for cost effective MRI policy options outside the deal.
- The task of getting home loan itself can be cumbersome. To check features such as availability of insurance options such as the MRI, compare products on a neutral information website such as bankbazaar.ph.