SegurChollo, a comparator specializing in life and health insurance, has developed a new free tool to help mortgage holders determine if it is truly worth keeping their life insurance with the bank or taking it out elsewhere. The mortgage bonus calculator allows you to calculate the potential impact on your monthly mortgage payment of cancelling the life insurance policy taken out with the bank. In many cases, even if the bank applies a small increase in the interest rate when you remove the insurance, the savings achieved by taking out an external policy can be much higher.
What happens when you remove life insurance from the bank
One of the most common questions for those with a mortgage is whether their instalment will increase if they cancel the life insurance policy taken out with the bank. According to SegurChollo, in most cases, there is no significant change in the mortgage, unless the deed expressly states a bonus on the interest rate associated with taking out that insurance.
When such a bonus exists, the bank may apply a small increase in the interest rate if the customer cancels the life insurance. However, this increase does not always mean the customer will pay more overall.
The key is to compare two figures: how much the mortgage instalment increases and how much is saved by taking out life insurance outside the bank.
One of the most common questions for those with a mortgage is whether their instalment will increase if they cancel the life insurance policy taken out with the bank. According to SegurChollo, in most cases, there is no significant change in the mortgage, unless the deed expressly states a bonus on the interest rate associated with taking out that insurance.
When such a bonus exists, the bank may apply a small increase in the interest rate if the customer cancels the life insurance. However, this increase does not always mean the customer will pay more overall.
The key is to compare two figures: how much the mortgage instalment increases and how much is saved by taking out life insurance outside the bank.
Bonus or penalty
Banks often present these conditions as a bonus on the mortgage interest rate. However, SegurChollo believes that customers should often analyse this as a potential hidden penalty, because the price of insurance taken out with the bank can be much higher than what can be found elsewhere for equivalent coverage.
In practice, the customer may accept a small reduction in the mortgage interest rate but end up paying much more for life insurance. Therefore, before keeping a policy just to maintain the bonus, it is advisable to do the math.
SegurChollo's new tool allows you to perform this calculation easily.
Banks often present these conditions as a bonus on the mortgage interest rate. However, SegurChollo believes that customers should often analyse this as a potential hidden penalty, because the price of insurance taken out with the bank can be much higher than what can be found elsewhere for equivalent coverage.
In practice, the customer may accept a small reduction in the mortgage interest rate but end up paying much more for life insurance. Therefore, before keeping a policy just to maintain the bonus, it is advisable to do the math.
SegurChollo's new tool allows you to perform this calculation easily.
How the calculator works
To use the SegurChollo calculator, the user needs to enter some basic information about their mortgage loan. This information is usually found in the mortgage deed or in the bank's documentation.
The required data includes:
To use the SegurChollo calculator, the user needs to enter some basic information about their mortgage loan. This information is usually found in the mortgage deed or in the bank's documentation.
The required data includes:
- Mortgage start date.
- Loan term.
- Amount borrowed.
- Interest rate.
- Penalty or interest rate increase that the bank would apply upon cancellation of life insurance.
- Current price of life insurance with the bank.
- Estimated price of new insurance outside the bank.
Real savings cases
SegurChollo has identified cases where, even with a small increase in the mortgage instalment, the final savings are still significant.
Young couple with a bank mortgage A young couple paid for two life insurance policies with their bank: one for €211.80 per year and another for €162.96 per year. After comparing options outside the bank, the new life insurance policy cost €55 per year for each of them.
The annual savings on insurance were €264. Although the mortgage increased by €3 per month, or €36 per year, the final savings remained clearly positive.
Alberto, over 50 years old
Alberto paid €850 per year for his life insurance with the bank. By taking out a new policy elsewhere, the price dropped to €403 per year.
The mortgage instalment increased by €2 per month, or €24 per year. Even after deducting this increase, the final savings were €423 per year.
According to SegurChollo, the greatest savings are usually found in people over 50, as life insurance with the bank can become very expensive with age.
Couple aged 50 and 53
Another couple, aged 50 and 53, paid €1,100 per year between them for their life insurance policies linked to their mortgage. Upon reviewing the case, the new insurance cost €482 per year.
Their mortgage increased by €10 per month, or €120 per year. Even after deducting this increase, the final savings were €498 per year.
SegurChollo has identified cases where, even with a small increase in the mortgage instalment, the final savings are still significant.
Young couple with a bank mortgage A young couple paid for two life insurance policies with their bank: one for €211.80 per year and another for €162.96 per year. After comparing options outside the bank, the new life insurance policy cost €55 per year for each of them.
The annual savings on insurance were €264. Although the mortgage increased by €3 per month, or €36 per year, the final savings remained clearly positive.
Alberto, over 50 years old
Alberto paid €850 per year for his life insurance with the bank. By taking out a new policy elsewhere, the price dropped to €403 per year.
The mortgage instalment increased by €2 per month, or €24 per year. Even after deducting this increase, the final savings were €423 per year.
According to SegurChollo, the greatest savings are usually found in people over 50, as life insurance with the bank can become very expensive with age.
Couple aged 50 and 53
Another couple, aged 50 and 53, paid €1,100 per year between them for their life insurance policies linked to their mortgage. Upon reviewing the case, the new insurance cost €482 per year.
Their mortgage increased by €10 per month, or €120 per year. Even after deducting this increase, the final savings were €498 per year.
Insurance can cover the same outside the bank
SegurChollo reminds us that taking out life insurance outside the bank does not mean giving up important coverage. Life insurance taken out elsewhere can include the same main guarantees required by a mortgage: death from any cause and total and permanent disability.
Furthermore, if the bank requires the insurance to be linked to the mortgage, the bank can be designated as the primary beneficiary for the outstanding capital. In this case, if the insured person dies, the bank would receive the amount necessary to cancel the debt.
However, SegurChollo recommends carefully reviewing this arrangement, as it may limit the heirs' freedom. If the insurance is not directly linked to the bank, the beneficiaries can decide what to do with the money: continue paying the mortgage, cancel it, or use it for other family needs.
SegurChollo reminds us that taking out life insurance outside the bank does not mean giving up important coverage. Life insurance taken out elsewhere can include the same main guarantees required by a mortgage: death from any cause and total and permanent disability.
Furthermore, if the bank requires the insurance to be linked to the mortgage, the bank can be designated as the primary beneficiary for the outstanding capital. In this case, if the insured person dies, the bank would receive the amount necessary to cancel the debt.
However, SegurChollo recommends carefully reviewing this arrangement, as it may limit the heirs' freedom. If the insurance is not directly linked to the bank, the beneficiaries can decide what to do with the money: continue paying the mortgage, cancel it, or use it for other family needs.
A tool for making informed decisions
SegurChollo's new calculator aims to bring clarity to a decision that many families make without understanding the real impact. The question should not only be whether the mortgage goes up or down, but how much is paid in total between the mortgage and the insurance.
In some cases, maintaining the bonus may make sense. In others, removing life insurance from the bank can generate significant savings year after year.
In addition to this tool, SegurChollo offers a mortgage life insurance simulator for those who want to calculate how much they could save by reviewing their loan-linked policy, as well as a life insurance comparator to explore options from different companies.
SegurChollo's new calculator aims to bring clarity to a decision that many families make without understanding the real impact. The question should not only be whether the mortgage goes up or down, but how much is paid in total between the mortgage and the insurance.
In some cases, maintaining the bonus may make sense. In others, removing life insurance from the bank can generate significant savings year after year.
In addition to this tool, SegurChollo offers a mortgage life insurance simulator for those who want to calculate how much they could save by reviewing their loan-linked policy, as well as a life insurance comparator to explore options from different companies.
About SegurChollo
SegurChollo is a comparator specializing in life, health, and funeral insurance that helps users compare options, better understand their policies, and identify potential savings, especially on life insurance linked to mortgages. Through its online tools, SegurChollo allows users to check if the insurance taken out with the bank is truly worthwhile or if more economical alternatives exist outside the banking institution.
SegurChollo is a comparator specializing in life, health, and funeral insurance that helps users compare options, better understand their policies, and identify potential savings, especially on life insurance linked to mortgages. Through its online tools, SegurChollo allows users to check if the insurance taken out with the bank is truly worthwhile or if more economical alternatives exist outside the banking institution.
