The unfortunate death of Filipino blogger Lloyd Cadena brought to light the importance of the Mortgage Redemption Insurance (MRI). Because of MRI, his family will not go through the hardship of paying for the housing loan after his death. Instead, Lloyd Cadena was able to truly leave behind a gift of love for those dear to his heart.
What exactly is MRI?
There have been countless of teleserye storylines wherein an affluent family experienced immense loss and suffering because of the death of the breadwinner. Scenes of bank personnel seizing the assets and throwing the family out of their homes and into the streets have probably been the content of nightmares of home owners. Unfortunately, without proper protection against untimely death, a real estate investment can provide your family with more loss than gain.
This is where MRI steps in.
MRI is a kind of term insurance that pays off a part or the whole of the outstanding mortgage in the event of death or total disability of the insured homeowner.
If you are a homeowner in the Philippines, your first encounter MRI was when you applied for a home loan. MRI is required by banks when taking out a loan, wherein the coverage is equal to the loan amount, and the beneficiary is the bank.
You could recall when you were buying your first premium condominium in Makati, you felt that the MRI was a so-called “hidden expense” and was just another means for the bank to earn. You tried to negotiate with the bank to remove such expense by citing a clean bill of health as a reason not to need one. You even listed down all the healthy habits you had developed over time. However, banks were stern about it and refused to approve your loan without an MRI.
MRI is a two-way protection.
Despite how some borrowers feel about MRI, it is actually protection not just for the bank but for the homeowner as well. For the bank, an MRI lowers the risk of loss during an untimely death of the borrower. No matter what happens, the loan will be paid. For the homeowner, as proven by the case of Mr. Cadena, it settles the loan amount. In the case of the sudden passing, the upscale real estate will not be seized by financial institutions.
How do I get an MRI?
Most banks have an accredited insurance provider and include the MRI in the loan computation. The premium is dependent on the amount of loan, age of the borrower, gender, overall estimated life expectancy, and a bunch of other factors.
Alternatively, if the borrower has an existing life insurance, he/she can assign the bank as one of the beneficiaries and use this insurance as the MRI. This is probably the only way to avoid paying the MRI during home loans.
How long is the coverage of the MRI?
Since MRI is a term insurance, it is co-terminus with the loan. Unlike life insurance, the sole purpose of MRI is to pay off the loan in case of death or total disability. It cannot be used for any other purpose. A borrower will not enjoy savings at the end of the insurance coverage nor will he/she receive a lump sum.
Though you may feel like MRI is an unnecessary expense, it is actually a very important add-on to your loan. With an MRI, you can be assured that the upscale properties you purchased at Crown Asia will be enjoyed by your family regardless of what happens to you. Premium condominiums, whether in Laureano de Trevi in Makati or The Currency in Pasig will definitely be a long-term real estate investment for your family. An MRI is not a needless expense but proof of your love.
