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How and when to transfer mortgage life insurance

At any time, you can transfer your mortgage life insurance to another insurer and save a lot. Find out how to do it.

Transfer life insurance from home loan it is a simple process and it is a solution that will allow you to obtain significant savings.

It should be remembered that the costs inherent to housing credit represent a considerable part of the expenses of the family budget. Although the loan installment remains constant over time, the life insurance premium increases as you get older, even with the reduction of guaranteed capital. Therefore, transferring life insurance from your home loan is often the solution to keep family finances balanced.

So, find out when you should think about transferring your insurance and how you can do it.

Mortgage life insurance: frequently asked questions

When you take out a home loan, take out life insurance. It is not mandatory insurance, but it will be difficult to find a bank that gives you that choice.

This is insurance made by the contracted capital and whose term coincides with the term of the loan. Its beneficiary is the bank that grants it the credit, which protects both parties. In case of fatality, the loan is paid in full at the amount contracted in the life insurance. On the one hand, it guarantees the financial institution the repayment of the capital it lent to it; on the other hand, you have the guarantee that your heirs will be free of this debt.

Couple analyzing family budget


Do I have to take out insurance at the bank where I applied for the home loan?

The bank that granted you the loan will at the same time suggest contracting life insurance. And in most cases it offers a bonus on the spread with this contract. Although it sounds tempting and easier, it is not always the best solution.

In fact, according to the legislation in force, the bank has the obligation to inform you that you can contract life insurance with the insurer you want. You can even use life insurance that you have already taken out, as long as it meets the bank’s requirements, and place the financial institution as the beneficiary.

So, before deciding to take out insurance with the bank, ask other insurers for proposals. With identical covers, choose the most economical. Remember that the value of the life insurance premium is not included in the benefit you will pay. add to this and, therefore, it is another monthly cost, which, despite being included in the APR, we do not give much importance at first.

When analyzing the proposal that is presented to you, don’t just look at the value of the insurance in the first year. Also keep in mind that life insurance capital is adjusted according to the capital owed and, for that reason, the premium should even decrease over time, but the truth is that this is not the case. The premium increases according to your age. Therefore, what is beneficial today may not be beneficial in a few years.

Hidden costs with home loan insurance

See too
Housing credit: the costs you are paying and you don’t know


The life insurance premium on my home loan is very high. Can I change insurers?

Yes you can. Decree-law nº 222/2009 came, in its article 4, make it possible to transfer the mortgage life insurance to another insurer during the term of the contract.

Whether you have contracted with the bank or with another insurance company, the fact is that the premium increases as you get older, because with advancing age, the risk of fatality is, in terms of probability, greater.

Thus, there may come a time when the amount to be paid is about triple what you paid at the time you took out the credit. In fact, the cost of life insurance is what we call the hidden cost of home loans.

Do market research, ask for and evaluate proposals and always keep in mind coverages and exclusions.


In addition to life insurance, can I transfer my home loan to another bank?

You always have the chance to change your bank credit, if you come to the conclusion that doing so will benefit you. And at a time of great competitiveness between banks, you may not even have any penalty in terms of spread or any costs to proceed with the change of bank entity.

How to transfer life insurance from home loan? What are the procedures?

Transferring the life insurance of your home loan follows a set of bureaucratic procedures, but in the end they are worth it.

We will now systematize all the steps you have to take before, during and after changing your home loan life insurance:

1. Analyze the conditions of your home loan, namely those associated with the spread.

two. Ask for proposals from other insurers, taking into account the coverage and contracted capital. Analyze and choose the most affordable.

3. Negotiate with the bank to maintain the spread. Even if you can’t, if the new insurance proposal is more advantageous, go ahead.

4. Contract the new insurance taking into account the effective date.

5. Report the insurance you have in force, sending a registered letter to the insurer 30 days before the date on which you want to cancel the contract (date that must coincide with the start date of the new contract).

6. Inform the bank of the change in the insurance contract. Deliver a copy of the insurance cancellation letter and a copy of the new contract.

7. Keep copies of the letters sent to the insurance company and bank as evidence.

8. Cancel the direct debit authorization of the insurance you reported.

With this, the process of transferring your home loan insurance is complete. Take advantage and set up an emergency fund with the amount you saved with the transfer.

You can repeat this process as many times as you like. The important thing is to periodically review your insurance. At the end of the loan’s life you are sure to have saved a significant amount.

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