Families use the building loan to finally fulfill their dream of owning a home. What makes financing your own four walls so attractive is currently low interest rates. The advantage: With the standard repayment of one percent, the financial burden can be kept within limits. A building loan not only paves the way to home ownership, it can also become a fiasco.
Where does risk life insurance start here? What advantages does it have, for example, compared to pure residual credit protection?
Building loan: Wrong planning leads to ruin
In general, home finance is the only solution that leads to home ownership in most cases. The problem: the credit framework is complex. Planning errors sometimes only show up after years.
Who as a family at:
- Borrowing rate fixation
- Redemption rate or
- Incidental purchase costs
making wrong decisions puts your financial future at risk. Expensive refinancing, for example, can significantly exceed the budget. But other aspects also become risks. This includes:
- Unemployment and
All three aspects affect financial performance. A household is quickly no longer able to finance the loan installment.
Security through life insurance
A residual debt insurance should generally protect against all three risks. The problem: The premiums are substantial given the amount of the loan. And whether the benefit actually occurs is not certain. Especially in the context of a divorce, the sale is also in the room.
Risk life insurance is heading in a different direction. The primary concern here is to protect the family in the event that a death disrupts the entire income situation.
If there is no income, the bereaved can quickly stand with their backs to the wall. Thanks to the life insurance, the financing is still covered.
And risk life insurance is often the much cheaper option compared to residual credit insurance – especially since the contract can also be concluded as a tariff for connected lives. Because of this, many experts consider life insurance to be an important safeguard.
In practice, homeowners can insure the property or their surviving dependents with risk life insurance in such a way that the sum insured adapts to the progress of the repayment. Here we speak of life insurance with a falling sum insured.