It was four years ago when I received an unexpected call from my husband's colleague. And his first question to me was, "Joan, kapag ba kukuha ng insurance policy, kailangan bang magbayad na agad? Eh ipapa-medical pa Misis ko, hindi pa sure if ma-approve agad un." (Joan, when applying for an insurance policy, do I need to pay already? My wife will still go through medical, and it is not yet sure if she will be approved.")
I told him I'm not sure about the process with other companies. But with Insular Life, I informed him that his wife could apply for an insurance policy now, and have the initial premium debited from their bank account once it is approved. Being more comfortable with that, we set a meeting that same week.
During that client call, the couple told me that they are applying for a Php7-million home loan and are planning to use the life insurance policy for the Mortgage Redemption Insurance or MRI. An MRI is a form of life insurance that pays off the insured's outstanding mortgage balance in case of his or her untimely death. This is one of the bank's requirements when applying for a home loan.
Many may oppose shelling out precious pesos for an MRI, as they feel that they already have too many financial obligations. But the truth is, an MRI does not only protect the bank, which the insurance guarantees that the bank will be paid back the amount it has lent, but more importantly, an MRI also protects the insured's surviving family as it settles the outstanding home loan balance.
The excess of the insurance benefit as the home loan balance decreases, will be given to the beneficiaries.
If you have an existing life insurance policy, you can assign your policy to your bank, regardless of which bank you are getting the home loan from and which company your life insurance policy is from. If you have none, the bank will require you to get an MRI, which is usually incorporated to your housing loan payment.
But because the MRI is renewed every year, the premium payment goes down the drain in case nothing happens to the borrower on that covered year. This makes getting a life insurance policy instead the practical option for such purpose as no premium goes to waste.
My client applied for a Php7M life insurance policy with Insular Life, the first and largest Filipino-owned insurance company, and the only mutual insurance company in the country today. We then attached a Php1M critical illness rider to the policy, wherein my client gets that Php1M lump sum 30 days after diagnosis of any major critical illness, regardless if she is still paying off her home loan or not. With InLife, you can apply for a maximum of Php10M for this rider.
Over the paying years, their home loan balance decreases. And if anything happens to the insured, only the outstanding balance goes to the bank. While the excess from her Php7M life insurance policy goes to her beneficiaries.
