Don’t Think Twice About Getting Mortgage Redemption Insurance― Here’s Why



Last updated February 14, 2022

Owning a home is one of many Filipinos greatest dreams. It’s a worthwhile investment not only for you but also for your family. However, not everyone can buy a home in full. As a result, many take on housing loans to purchase their dream home. It's the most recommended, if not the best, financing option for buying a new house or renovating a property.

But what happens to a housing loan if the borrower dies and the mortgage is still unpaid? This is where Mortgage Redemption Insurance (MRI) comes in. Having this kind of insurance ensures that your outstanding mortgage debt is paid in the unfortunate event of death or total disability.

Learn more about Mortgage Redemption Insurance in housing loans below.

What is Mortgage Redemption Insurance?

Mortgage Redemption Insurance is a life insurance policy that helps repay your mortgage balance in the event of your death before the housing loan’s full repayment. MRI will protect your home from foreclosure, as it will take out your outstanding debt if you die.

Just like any other insurance policy, MRI covers a set amount and duration. It dictates how much of your mortgage can be covered and for how long. The higher your premium is, the better your coverage will be.

However, keep in mind that just because you have an MRI doesn’t mean your outstanding housing loan balance will be paid in full. It will still depend on the kind of coverage you have. If you chose an MRI with the cheapest premium, the coverage would be minimal as well.

What is MRI in Housing Loans?

mortgage redemption insurance - mri in housing loans

MRI is now mandatory when applying for a housing loan in the Philippines. Your bank will ask you to get this policy as part of the borrowing process.

If you have life insurance, for example, a Sun Life or PruLife UK life insurance or VUL, you can use this as your mortgage redemption insurance, too. Simply assign your loan provider as your insurance beneficiary.

Instead of having your home foreclosed due to surviving family members who cannot pay the loan, your life insurance proceeds will pay off your housing loan.

While many hesitate to get an MRI because of its hefty premiums, this may save your loved ones from drowning in debt or losing the home you worked hard for.

Read more: Everything You Need to Know About Non-Life Insurance in the Philippines

MRI Versus Other Life Insurance Products

Just like other life insurance policies, MRI gives you and your family financial security should an unexpected tragedy happen, like a terminal illness, disability, or even death. While life insurance products may cover hospitalization, burial and funeral expenses, and education, they don’t cover the mortgage—the biggest expense that the breadwinner may leave should they pass.

Life insurance may provide financial assistance to the remaining family members until they can recover. However, the payout may not be enough to cover the household’s monthly mortgage payments.

This is why MRI is becoming more important than ever for home buyers. This particular policy ensures that your legacy, in the form of your dream home, continues to benefit your loved ones even after your passing.

However, you can use your existing life insurance as an MRI. Your policy may cover your outstanding home loan amount, giving your family an extra helping hand during trying times. Talk to your insurance provider to know more about using your current policy as an MRI.

MRI Versus Other Home Insurance Products

mortgage redemption insurance - mri versus other insurance products

Mortgage Redemption Insurance is only one of the many insurance policies you can get to protect your home and your family. However, MRI doesn’t cover any damage that may occur to your property. This policy covers only your home loan payments in the event of your passing or disability.

The following are insurance types that can protect your property from fire, theft, natural disaster, and other accidents:

  • Property insurance – helps protect your home from an unexpected natural disaster like earthquake, fire, storm, and volcanic eruption.
  • Home insurance – helps protect your home from financial losses due to theft, vandalism, and other damages.
  • Contents insurance – protects the contents of your house from theft, burglary, and other damages.

Read more:

Personal loan in the Philippines

How Much is MRI in the Philippines?

Now that you know the importance of having MRI, how much does an MRI cost in the Philippines?

The price of a mortgage redemption insurance policy varies and typically depends on the amount of your home loan and your chosen insurance provider. In general, your lender may require you to get an MRI coverage equal to the amount you're borrowing for a mortgage. Your premium is based on this coverage.

For example, if you're applying for a PHP 2 million home loan, your lender will require you to get an MRI that covers this amount. However, this coverage will decrease annually, based on a pre-determined decreasing balance of your mortgage.

How Do I Apply for MRI?

If you’re applying for a home loan, getting an MRI is typically part of the process. You may be required to pay your MRI premium all at once, instead of paying monthly fees throughout the duration of your policy.

As mentioned, if you already have existing life insurance, this can be assigned as your MRI. However, you have to put your home loan lender as the beneficiary of the policy, instead of your family. You'll then have to present your policy to your lender, proving that there are enough funds to pay your mortgage.

However, if you don’t have an insurance policy, your lender will ask you to get one, as part of your mortgage application.

Where to Get Mortgage Redemption Insurance

Ready to get an MRI? Here's where you can get mortgage redemption insurance in the Philippines:

1. BenLife 

mortgage redemption insurance - benlife

Beneficial Life Insurance Co. Inc., or BenLife, was established in 1960 and is a wholly Filipino-owned life insurance company. Suffice it to say, it's one of the most stable and reputable life insurance companies in the country.

For its mortgage redemption insurance plans, BenLife[1] offers the following:

10 Year Convertible Term (10YCT)

The 10YCT's cheapest cost of insurance is PHP 1,000, which is a great option for homeowners looking for more affordable cash value plans. If anything happens to the insured that results in their death within the 10-year protection period, the full insurance amount will be paid to their beneficiaries.

Limited Pay Whole Life Plans

This plan provides lifetime insurance protection payable in two, five, or 10 years. Moreover, the amount of insurance coverage is equal to the loan outstanding balance. Since these also accumulate cash values, the amount of coverage plus the accumulated dividends will be paid out to the insured's beneficiaries.

Beneficial Money Accumulator Plan (BMAP)

This plan also offers lifetime insurance protection at the lowest price as you'll pay the premiums for life. It also earns cash values that you can avail in emergencies through a policy loan. BenLife will credit the annual dividends (not guaranteed) after the second year.

2. PAG-IBIG Fund

If you have updated Pag-IBIG housing loan amortization payments, the mortgage redemption insurance of Pag-IBIG will pay off the loan in the event of the principal borrower's death. Pag-IBIG members who have permanent total disability or terminal illness may also file an MRI claim if certain requirements and conditions are met.

In case the MRI proceeds are not enough to cover the outstanding loan, the remaining borrowers, beneficiaries, or heirs will need to settle the outstanding obligation by making a full payment, applying for a Revised Amortization Scheme, re-documenting the housing loan application, or availing the Dacion en Pago program.[2]

Other MRI Providers in the Philippines

Country Bankers Life Insurance Corporation

This full-service insurance provider has been around for over 50 years. Country Bankers Life Insurance Corporation[3] makes insurance accessible to Filipinos by establishing partnerships with rural banks in the country. As such, its Mortgage Insurance Redemption protects lending businesses by paying deceased debtors’ unpaid loans.

Paramount Life and General Insurance

Paramount's Group Mortgage Redemption Insurance plan[4] also provides banks and financial lending institutions the protection with every loan they approve for borrowers. It covers borrowers aged 18 to 65 years old who have real estate, housing, and housing loans or other long-term loans.

Sun Life Creditor's Group Life

Much like the Paramount's mortgage redemption insurance plan, Sun Life Creditor's Group Life[5] protects creditors and their debtors by reducing their risks of having unpaid loans. This plan secures loan repayments and guarantees prompt loan settlements.

Final Thoughts

Just like any other investment, you should protect your dream house with insurance. It may come with hefty premiums, but a mortgage redemption insurance policy ensures that your debt will be taken care. You’ll have peace of mind, knowing your family will have the financial assistance to pay off your mortgage during difficult times.

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