Why You Should Get A Mortgage Redemption Insurance (MRI)
Planning to buy a house? The cost of buying one may not be as straightforward as it seems. Aside from the fact that there will be interest on your home loan, which can be quite perplexing to derive by yourself, there are other add-on costs that you may not know about like the Mortgage Redemption Insurance or MRI.
Whether you’re taking a home loan from a bank or from our good old Pag-IBIG, don’t be surprised that an MRI will be included in your quote. It’s a requirement for every homeowner, thus both Pag-IBIG and the banks have it by default.
It’s practically insurance for your house, but not one that will pay you for damages or accidents.
What is MRI?
MRI is an insurance policy that provides financial protection for home loan borrowers and their families. Specifically, MRI helps settle outstanding home loan amounts in the event of death or total disablement of the borrowers.
Why Would You Need MRI?
MRI is essentially a protection mechanism for all people with home loans, and especially for households with sole breadwinners.
Generally, in the event of untimely death or disability of a home loan borrower (significantly if he or she is the main income earner), the greatest problem facing surviving households is their ability to pay off the remaining home loan. In many instances, the surviving family members may even need to sell off the property at a less-than-competitive price just to pay off the outstanding amount.
By signing up for MRI, surviving family members will not be left with such a burden because MRI covers part or the entire unpaid portion of a home loan.
How Does One Apply for MRI?
In the Philippines, home loan applicants do not need to go out of their way to find an MRI provider because MRI is usually incorporated as part of the home loan application process. Commonly, you’ll only be required to pay a single MRI premium. You will not need to pay a premium again throughout the entire duration of the policy.
Important Considerations for MRI
Like any other insurance policy, MRI has a specific insured amount as well as policy duration. Bear in mind that in the event of death or permanent disability, MRI would pay off ONLY the amount that is covered, within the time, as dictated by the policy. It does NOT pay for everything that the insured owes to the bank.
Due to the above reason, home loan applicants are generally advised to purchase MRIs based on their specific requirements (instead of just going for the cheapest policies available). For sole breadwinners, buying maximum coverage is especially recommended despite a heftier premium, because your families are more at risk should anything happen to you. For households with multiple income winners, you may consider opting for a policy with lower coverage.
Buying a home is a big financial decision and can most of the time cost us a fortune. MRI can mitigate the risk that comes with investing in a new house.