The expert warned about the risks of refusing mortgage insurance

Mortgage life and health insurance helps to protect the borrower and his relatives from financial risks in case of difficult life circumstances. Victoria Lessar, Director of Mortgage Insurance Development at Rosgosstrakh, told Izvestia on May 3.

According to her, such a policy provides for repayment of the loan if the borrower dies or gets a disability of group I or II due to illness or accident.

"Such insurance is not mandatory — the law does not require it. However, such a policy is an important tool for fulfilling the borrower's obligations to the lender in the event of death or disability: the debt to the bank will be repaid through insurance payments," Lessard said.

The expert explained that the insurance contract is usually concluded for a year with the possibility of extension or immediately for the entire term of the loan. According to the specialist, it is important to take into account the coverage conditions. The insurance company will repay the remaining debt upon the occurrence of an insured event, however, there are exceptions.

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"For example, if an insured person falls ill and receives a disability group I or II, the company will pay off the rest of the mortgage debt for him. The same thing will happen in most cases if the borrower passes away — his relatives will not have to pay off the loan on their own. But, for example, if death occurred as a result of an accident that occurred due to the fault of the borrower, who was intoxicated, the payment will be refused," she said.

The expert added that temporary disability, if it is not specified in the contract, does not apply to insured events. Also, the policy does not cover the risks associated with the housing itself — this requires separate property insurance.

Lessard stressed that the insurance payment is received by the bank, and if the amount of coverage exceeds the remaining debt, the difference is transferred to the borrower or his heirs. According to her, the contract can be terminated prematurely, but this may affect the terms of the loan.

"If the insurance is refused, the bank may reconsider the terms of the loan and raise the interest rate, if this is stipulated in the contract," the expert warned.

The specialist recommended clarifying the terms and conditions with the bank and the insurer in advance in order to avoid financial risks when changing or terminating the policy.

An increase in the limit on life and health payments for CTP from 500 thousand to 2 million rubles may lead to an increase in the cost of policies. The Russian Union of Motor Insurers (RSA) estimated on April 20 that the average premium could rise by about 10%.