What insurance is required for a mortgage with Sberbank?
It is impossible to obtain a mortgage without insurance from Sberbank. And these are not just internal requirements of the bank, this is stated in Article 31 of the Law “On Mortgage”. If the client flatly refuses to insure the property, he will be denied a loan to purchase a home.
As mentioned earlier, there are 3 types of insurance when taking out a mortgage. Sberbank will not require registration of all three. Only insurance of the purchased property is required. The collateral must be insured in favor of the bank against the risk of loss, destruction or damage. Such a policy is issued exclusively at the expense of the client’s personal funds.
Expert opinion
Alexander Nikolaevich Grigoriev
Mortgage expert with 10 years of experience. He is the head of the mortgage department in a large bank, with more than 500 successfully approved mortgage loans.
Life insurance is not necessary to get a mortgage. However, in case of refusal, Sberbank will increase the mortgage interest rate by at least 1 percent. In this case, the borrower will lose more on this interest than he will spend on life and health insurance.
Factors that influence the cost of a life insurance policy
One of the most important issues that concern borrowers when considering life insurance is the size of the annual premium. The cost of the policy will vary for each potential client. Tariffs are influenced by several factors. Let's look at them in order.
Factor 1. Age and gender
Everything is simple here: the younger the client, the theoretically, he has fewer health problems and threats to life. Accordingly, the insurance company takes less risk, which leads to a reduction in the premium amount. Therefore, it is more profitable to take out a mortgage at a young age.
Statistics in our country show that on average women live 5-7 years longer than men. Therefore, insurance companies set lower rates for them.
Factor 2. Health status
When calculating the amount of the contribution, the medical history of the future client’s family is taken into account. The presence of diseases such as hypertension, oncology and diabetes will certainly lead to an increase in insurance rates. Hereditary and genetic problems will also increase your premium.
Factor 3. Excess weight
This factor can significantly increase the tariff even for young people, because this is a significant risk to their health. Excess weight means that a person is potentially susceptible to developing critically serious diseases.
Insurance companies will definitely calculate your BMI (body mass index) and if it turns out to be higher than the norm, the amount of the annual premium will increase. Weight loss = reduced tariff.
Factor 4. Profession
Insurers increase the annual premium when they learn that a client's work poses a risk to life. In this case, the ideal candidate for life insurance is an office worker whose activities do not pose any risk to life and health.
Factor 5. Lifestyle
Insurance companies will definitely pay attention to the lifestyle of a potential borrower. Thus, smokers will pay more than those who do not smoke.
Expert opinion
Alexander Nikolaevich Grigoriev
Mortgage expert with 10 years of experience. He is the head of the mortgage department in a large bank, with more than 500 successfully approved mortgage loans.
There is no point in deceiving in this matter. The client will fill out a special medical declaration, which will indicate the number of cigarettes smoked per day. Entering knowingly false information may lead to refusal of payment in the event of an insured event. The same applies to alcohol.
Even the borrower’s passion for extreme sports is a reason for the insurance company to raise the cost of the policy. Skydiving, bungee jumping and other potentially dangerous activities pose a serious risk to human life and health.
Calculation method
The insurance policy associated with the mortgage is issued by the insurance company for a year and then extended until the loan is closed. When there are three weeks left before the payment is completed, the bank sends the company information about the amount of the remaining debt. Based on this, the insurance company recalculates the contribution.
What criteria influence the amount of life insurance:
- Age;
- Profession;
- Presence of chronic diseases.
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The tariff increases annually for borrowers over 40 years of age. This is due to the increased risk of the possibility of an insurable situation. It is more difficult for this category of citizens to choose a cheap option for obtaining a policy. Borrowers who work in hazardous workplaces also pay more for life insurance.
Factors that influence the home insurance rate
It is difficult to answer unequivocally how much it will cost to insure a specific property. The tariff size is influenced by several factors.
Factor 1. Type of housing
The cost will even be affected by whether the apartment is purchased for the client’s permanent residence or for other purposes. Insurance companies do not favor properties that are rented out. At the same time, it is believed that its owner is less interested in preserving the integrity of the apartment.
Expert opinion
Alexander Nikolaevich Grigoriev
Mortgage expert with 10 years of experience. He is the head of the mortgage department in a large bank, with more than 500 successfully approved mortgage loans.
Also be prepared to pay more if you purchased a dacha that you plan to visit no more often than on weekends. This leads to an increase in the risk of intrusion and damage to housing, and therefore to an increase in the price of the tariff.
Factor 2. Year the house was built
Insurers love new homes. The older the property is, the more expensive it will be to pay the insurance premium. Many companies do not insure homes at all that are over 65 years old (built in 1955).
Factor 3. Material of walls and ceilings
It is logical to assume that the difference in the tariff for insuring an apartment in a panel house and a wooden house will differ significantly not in favor of the latter. This is because the tree is more at risk of damage. Therefore, it is cheaper to insure real estate made of concrete panels or bricks.
Factor 4. Presence of sources of open fire
If your home has open fireplaces, stoves, or other sources of open fire, insurance agents will raise the cost of your annual premium. Stoves pose a direct risk of fire. And fire is one of the most common insurance events.
There are several factors that will reduce the cost of the annual fee. The presence of an alarm system, protection from fires and floods, etc. This indicates that property owners are willing to spend money on ensuring its safety. The risk of an insured event is reduced, and therefore the amount of premiums is reduced.
Types of mortgage insurance
Modern banks do not limit borrowers in their desire to obtain insurance. They encourage such actions because it significantly reduces the risk of encountering problems.
Therefore, when applying for a loan in 2020, you can insure:
- purchased or pledged apartments, garages, houses (mandatory by law);
- life and well-being of the debtor;
- life and health status of guarantors;
- loss of job, salary or position;
- additional risks.
Refusal from only the first item of the presented list is not allowed. That is, life insurance for a mortgage at Sberbank is issued only at the request and with the consent of the borrower. But banks are still able to set some restrictions. They often set special requirements for insurance companies and are ready to agree only on those contracts that meet their interests.
For the convenience of clients, most credit institutions compile in advance a list of organizations with which they are ready to cooperate. But, if the insurer meets the presented conditions, you don’t have to rely on the list.
Why do you need mortgage insurance?
Finding information about why you need life insurance for a mortgage at Sberbank in 2020 should not be difficult. By issuing money to buy an apartment, townhouse, garage or house, the bank risks its own capital.
In this case, the client is given a large amount, the loss of which is unacceptable. It is logical that financial institutions try to reduce the degree of risk they take, and drawing up an insurance contract is the simplest way to protect themselves from possible difficulties.
Knowing that the borrower is insured, lenders can rest assured that they will get back all the money they invested, even if the debtor becomes unable to repay. This also applies to unexpected job loss, demotion (if such insurance is taken out), serious illness and even death.
How to insure a mortgage for Sberbank cheaper - 4 tips
The following tips will help you get a policy at the best price:
- Do not take out insurance from Sberbank. The credit manager will impose insurance from Sberbank. Moreover, these impositions can be quite aggressive. No matter what bank employees say, you should not agree to their conditions, because the rates here are significantly higher than in other insurance companies. Many people put themselves at a serious disadvantage when they are afraid to argue with the loan officer or are simply not aware of their rights. Don't be afraid to refuse Sberbank. Contact other accredited companies, compare their offers and choose the one that will be most beneficial for you personally.
- Make the woman the main borrower. As we have already found out above, tariffs for women are lower than for men. Experts note that sometimes there is a difference of 2 times.
- Find out about discounts for regular customers. Remember, maybe you have CASCO or OSAGO? Can an existing apartment be insured? If you contact a company that has one of the listed policies, you can ask about a discount for a regular customer. Many serious companies do their best to accommodate their regular customers.
- Find out about promotions. When renewing the policy, the client has every right to change the insurance company. Many of them are ready to offer discounts of 10-15% simply for the fact that you switch to them. Moreover, the previous insurance company, having learned that you are about to cease being its client, may offer a special discount.
Nuances of property insurance for Sberbank
A standard property insurance policy only covers structural elements (walls, doors, windows and utilities). If desired, and for an additional fee, you can insure other elements: finishing, repairs, interior parts, etc.
What risks will be insured?
The property will be insured against:
- Natural Disasters. For example, structures or trees falling on a house.
- Fires and gas explosions.
- Lightning strikes.
- Illegal actions of other persons.
- Boiler explosions.
- Structural defects that were made during construction.
Approximate cost and terms
The insurance contract is valid for 1 year. The client is required to renew the policy annually until the mortgage is paid off.
Expert opinion
Alexander Nikolaevich Grigoriev
Mortgage expert with 10 years of experience. He is the head of the mortgage department in a large bank, with more than 500 successfully approved mortgage loans.
All accredited companies have approximately the same cost of insurance for structural elements - 0.25% of the loan amount. Since the cost is calculated based on the balance, the amount of contributions will decrease each year.
Step-by-step scheme for obtaining a policy
Sberbank has its own subsidiary insurance company called Sberbank Insurance, where all policy registration can be done online.
To do this, you must follow the instructions:
- Download and open the Sberbank Online application.
- Go through authorization in the application (enter the code sent by the system via SMS).
- Find it in the menu and click on the “Purchase” menu item.
- Go to the “Mortgage Insurance” subsection and read the basic rules for obtaining an insurance policy.
- Click “Go to calculation” and view the amount received.
- Click on the “Buy a policy” button, after which you will be redirected to the payment page.
- Choose a convenient payment option.
- Receive the policy by email.
The procedure for obtaining insurance from other companies:
- Provide the insurance company with a real estate appraisal report and name the mortgage amount.
- Calculate the cost of insurance.
- Make an insurance premium.
- Get an insurance policy.
- Provide information to Sberbank.
Documents that will be needed:
- Copy and original of the borrower's passport.
- Certificate or extract from the Unified State Register of Ownership of the purchased apartment.
- Evaluation report.
- A copy of the registration certificate for the property.
- A completed form with the details of the borrower and the mortgage agreement.
- Application on the form of the insurance company.
Nuances of life insurance for Sberbank
Life insurance is not mandatory. However, in its absence, Sberbank will raise the mortgage interest rate by 1%. Let's consider what cases will be insured, how much a life insurance policy costs and how to apply for it.
What risks will be insured?
When purchasing an insurance policy, you can expect that payments will be made when the following situations occur:
- Death.
- Disability.
- Serious injuries.
- Complex disease.
- Losing a job due to illness.
It is worth noting that each client himself chooses the risks that will be insured. The more risks there are in the contract, the higher the premium will be.
Approximate cost and terms
To check the health of a potential client, insurance companies request certificates from medical institutions about passing a medical examination. Depending on whether any serious illnesses were detected, the cost of the policy will be deduced. The price range is quite wide - from 0.3 to 1.5% of the loan amount.
Step-by-step instructions for purchasing a policy
To purchase a life and health insurance policy, you must:
- Choose the most suitable company and submit an application to it.
- Collect and provide the required package of documents. Each insurance agent will request a different list.
- Sign the contract and pay the insurance premium.
- Take out a policy. This happens quite quickly. When contacting Sberbank Insurance, the policy will be issued on the day of the transaction.
- Transfer the policy to Sberbank. Accredited companies themselves send insurance forms to Sberbank.
Existing risks
The contract for the purchase of the policy scrupulously describes all the conditions for ensuring payments. Their deadlines are also indicated. Although different companies slightly change the details of the agreement, the main criteria for insurance situations covered by the insurance company have been developed:
- Death due to an accident;
- Death due to illness;
- Loss of ability to work due to illness;
- Receiving disability due to an accident or illness.
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The insurance company has the right to refuse to make payments when the following factors are discovered:
- The citizen concealed a serious illness;
- The accident occurred during military operations;
- An individual has suffered due to illegal activities;
- The borrower intentionally harmed his health;
- Alcohol or drug intoxication caused the accident;
- The injury occurred after extreme sports;
- The insurance situation was caused by a mental disorder.
Risks are described in more detail in the contract. Cheap policies have a smaller list of insurance situations, but when only payments in case of accidents are recorded there, and the person dies due to illness, debt compensation will be denied.
