Any form of insurance or protection from unexpected mishaps is useful. Life insurance and car insurance are literally lifesavers when it comes to protecting your finances. But have you heard about MRI - Mortage Redemption Insurance? Well you should be as banks now require on from those getting a housing loan.
Did you ever wonder what will happen to your house without MRI? Pag-IBIG Fund and Banks can foreclose your property regardless of how much is your remaining loan. In a nutshell, MRI ensures that your family will STILL have your house to live when you die too soon. But still, read on to learn more details about this.
Mortgage redemption insurance (MRI) is another form of life insurance. Its purpose is to cover the outstanding balance of the home loan, be it the entire amount or a fraction of it, in case of total disability or untimely death of the home loan borrower.
At first look, this MRI seems like an additional expense or obligation that depletes your well-allocated funds and considered unnecessary. However, this requirement does not only serve beneficial to the banks but also you and/or your family.
MRI is now a requirement by banks and Pag-IBIG Fund before approving your HOUSING loan. Basically, the proceeds of your insurance will fully pay the remaining LOAN while the excess of the insurance money will be given to your heirs. It will spare your surviving family from dealing with the unpaid debt you have left.
In the Philippines, MRIs are usually conveniently incorporated as part of the home loan application process — this means you typically won’t need to go anywhere else and start a separate application process. Applicants are usually only required to pay the MRI premium once, in a lump-sum payment.
You can get a life insurance policies from your chosen Life Insurance provider and it's sole purpose it to act like an MRI. Or if you have an existing life insurance policy, you can assign your policy as your MRI (assuming the proceeds is equal to or exceeds the loaned amount).
Just like other insurance policies, meaning it depends on whichever option is better for you in relation to your financial goal. Also, do make sure you read and check the MRI specific terms and conditions. The policy you get only covers a specific amount (how much you are covered) and duration (for how long). The higher your premium, the better your coverage.
So do not expect that the cheapest option will erase your mortgage balance in case of death or total disability. It will still depend on the kind of coverage you avail.
For sole breadwinners, buying maximum coverage is especially recommended despite a heftier premium, because your families are more at risk should anything happen to you. For households with multiple income winners, you may consider opting for a policy with lower coverage.
Owning a home, for most of us, means that we’ve invested in something that will increase in value over the years. This is also why getting mortgage redemption insurance (MRI) is so important.
And just like with everything else, always conduct a due diligence to avoid scams or regrets later. Find or choose a trusted developer, banker, insurer and the like factors or things you deem necessary to have the kind of life you want to lead.
