However, many people believe they are required to accept the insurance products offered by the bank, when that is not always the case. Understanding the available options can help you reduce costs.
Life Insurance
Life insurance is designed to ensure repayment of the outstanding loan balance in serious situations such as death or disability of the insured person. This insurance protects:
- The family, by avoiding unexpected financial burdens
- The bank, by securing the repayment of the loan
- The borrower, by providing greater financial security
What Are IAD and ITP in Life Insurance?
In life insurance, there are two main types of disability coverage:
IAD (Absolute and Permanent Disability)
The insurance is only activated in very serious situations, when the person becomes completely dependent on others for basic daily needs.
ITP (Total and Permanent Disability)
The insurance is triggered when the person is unable to work in their profession or in a compatible activity, even if they are not fully dependent on others.
Within ITP, there are different disability thresholds required for activation:
- ITP 60%: activated at = 60% disability
- ITP 65%: activated from 65%
- ITP 66%: one of the most common thresholds in the market
Home Multi-Risk Insurance
Multi-risk home insurance protects the property against various risks that may cause damage to the dwelling.
Depending on the selected coverage, it may include protection against:
- Fire
- Floods
- Natural disasters
- Water damage
- Civil liability
- Theft or burglary
Are You Required to Take Insurance With the Bank?
As a rule, banks require insurance as part of the mortgage process, but in some cases you may choose an external insurer, as long as the policy meets the requirements set out in the loan agreement.
That is why, before accepting the bank’s offer, it is worth comparing options.
What Should You Compare Between Insurance Policies?
- Monthly or annual premium
- Included coverage
- Insured capital amounts
- Applicable deductibles
- Policy exclusions
- Claim activation conditions
Do Insurance Products Affect Mortgage Costs?
Yes. Many banks reduce the spread if insurance is taken out with them. However, this discount does not always outweigh the higher insurance premiums. It is important to assess the total cost of the mortgage:
- Loan repayments
- Insurance costs
- Any applicable discounts
Long-term overall cost In some cases, taking insurance outside the bank can result in significant savings, even if it leads to a slightly higher spread.
Is It Worth Comparing?
Yes, absolutely. Small differences in monthly premiums can translate into thousands of euros in savings over time.
Calculate your mortgage options today or contact us through our online form if you have questions or need help choosing the right insurance and mortgage solutions.