Financial Literacy 101
Education is the key to Financial Security
Mortgage Redemption Insurance
(Home buyers should know this)
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Kung ikaw ay may housing loan or nagpaplano ka bumili ng bahay through bank or PAGIBIG financing, chances are, you will be required to pay MRI or Mortgage Redemption Insurance.
Alam ko na maraming tao ang hindi aware or masyadong pamilyar dito sa topic na ito. So if you are a home buyer or perhaps may planong magkaroon ng sariling bahay or condo, then sana makatulong sayo ang article na ito.
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WHAT IS MRI?
MRI or Mortgage Redemption Insurance is an insurance policy na nagbibigay proteksiyon sa mga home loan borrowers and at the same time sa mga nagpapautang like banks, PAGIBIG and other financial institutions especially in the event of untimely death or disablement of the borrower while paying the loan. Normally MRI is a term insurance meaning renewable every year at naka incorporate na siya sa binabayaran na amortization.
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WHY IS MRI IMPORTANT?
Kadalasan, pag namatay ang breadwinner ng pamilya na siya ang nagbabayad ng home loan, the surviving family carries the heavy burden ng pagbabayad ng existing loan. Most of the time, the family is forced to sell the property at a lower price. Worst is, nareremata ng bangko ang bahay dahil di na kayang bayaran ang remaining balance at interest nito.
Ngunit kung may MRI ( Banks and other lenders now require buyers to sign up an MRI), at namatay ang borrower, the insurance proceeds of the MRI pay off the entire loan so fully paid na siya and the family now gets the title of the house. The MRI policy then terminates. In this case nabawasan ang financial burden ng pamilya.
On the part of the lender, they require na may MRI ang borrower para kung mamatay ang borrower habang nagbabayad ng amortization, di na sila mahihirapan singilin, ibenta or iliquidate yung bahay kasi mababayaran agad sila through the proceeds of the MRI.
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HOW TO APPLY AND WHAT IS THE PROCESS?
1. The home buyer signs up contract to sell and other documents from the home developer. Kadalasan kasama na sa mga pipirmahan ang bank loan forms, including MRI. So ang developer na ang magpapasa nito sa bangko for processing. The borrower then assigns the bank as the beneficiary of the insurance, NOT THE FAMILY.
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2. Upon loan approval, ididiscuss ng bank officer sa buyer ang details ng principal loan at MRI, kung magkano interest, monthly amortization etc. For example, ang total amount ng loan ay 2 MILLION payable in 20 years. So They will give you insurance coverage for that amount at isasama na nila sa monthly amortization mo yung premium para sa MRI mo.
3. The buyer now accepts the terms and conditions of the loan and MRI and he now starts paying for the monthly amortization for 20 years. It depends on the MRI contract how long is the MRI payable for. Normally payable din siya kung gaano katagal babayaran ang loan.
EFFECTIVE WAY TO SAVE MONEY FOR MRI
For some people, Getting an MRI might be a waste of money IF you survive after the paying period of your housing loan. In other words, after mong bayaran ang MRI for the longest time, at buhay ka pa, hindi mon a makukuha yung mga pera na binayad mo sa MRI kasi terminated na din yung contract.
Good news. There is actually a better and smart way na pwede mong gawin. Applicable to doon sa mga may existing housing loans na at doon sa nagpaplano pa lang bumili ng bahay in the future.
The best way to do is to talk to an insurance advisor and get a VUL insurance policy instead. Pwede mo kasi siya gawing MRI instead of paying a separate premium. Kung may existing insurance ka na, you can negotiate it with your bank para sila yung gawin mong beneficiary ng loan mo.
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For example, ang uutangin mo sa bank ay 2 MILLION PESOS. Pwede kang kumuha ng VUL plan for that coverage making the bank as your beneficiary until the loan is fully paid. Now, after mong matapos bayaran ang loan, maaari mon ang palitan ang beneficiary mo at gawin mong family members mo. So insured ka pa din ng 2 MILLION plus kumite pa yung pera mo since may investment component ang VUL.. In other words, di tapon pera mo. VUL may be more expensive than MRI term but is all worth it in the end.
Now, in the event of untimely death WHILE paying the house loan, lets say on the 5th year for example, the bank ONLY gets the remaining balance of the loan. Then kung magkano man ang sobra, mapupunta yun sa pamilya mo. Then terminated na yung contract.
I hope this helps!
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https://manychat.com/l1/financialliteracy101official
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