Confirmed: contracting life insurance with banks is up to 80% more expensive than with an insurer . This has been shown by a recent study by INESE and Global Actuarial on the price of life insurance for mortgages.
Over the years, our experience has shown us that taking out life insurance with the bank is much more expensive than with a company in the sector. And yet, it does not offer you anything that an insurance company does not have. Now, the latest study by INESE and Global Actuarial shows, with updated data from 2020, that this price difference still exists and is very important.
The study compared the premiums of various risk life insurance that covered death and absolute permanent disability, for people of 35, 40, 45 Y 50 years that will ensure 30.
Y 120 . 000 euros. To do this, they have analyzed all these assumptions in the 18 most important insurers ( Aegon, Asisa, Allianz, AXA, Santalucía…) and in 7 banks (Caixabank, Bankia, BBVA, Santander…). From all the results, an average figure has been calculated to be able to make the comparison.
The bank usually offers these products associated with a mortgage, often in exchange for a reduction in the interest rate of the loan. But does it really pay?
The result of the study is conclusive: on average, the price of bank life insurance is 446, 83 annual euros, almost a 80% higher than that of insurance companies (249, 26 euros). Furthermore, in 2020 bank premiums have risen 7.6% compared to 2019; On the other hand, insurers have lowered their prices by 2.5%.
Why is there so much difference in the price of insurance life?
There are two main reasons why banks inflate life insurance prices:
- They obtain a higher profit margin. If two companies offer the same product for a different price, it is obvious that one is making more money than the other. In the case of banks, they inflate the premium by almost 80%, so the only difference is that they will earn a lot more than insurers. On the other hand, the user does not get any advantage.
- They do not take into account the improvement in life expectancy . In 2019, the average life expectancy of a Spaniard was more than 83 years, according to the National Institute of Statistics (INE). On the other hand, only 20 years ago, it did not reach 79 years.
We live longer and that reduces the risk that we will die before our policy coverage ends. In other words: our life insurance is less likely to have to pay . This has greatly reduced the mortality tables with which insurers calculate prices, and that is why they are cheaper. However, banks do not take this variable into account and have not adapted their prices to this new reality.
What if they offer me a reduction in the interest rate?
Banks offer life insurance along with mortgages. In many cases, these are combined loan products; If you hire them, they lower your mortgage interest rate a bit.
However, it is very important to make calculations before accepting the insurance of the entity . If the premium can be up to 80% higher than it should be, you may not be making up for the lower premium. of the mortgage. Let's take an example:
The bank offers a person of 40 years a life insurance of 446 euros per year for a capital of 120. 18 euros. In return, the interest on the mortgage is lowered and the installment will be reduced from 600 to 590 euros per month. For its part, the insurer offers you a policy equal to 249 euros
If we do the calculations, we will see that 120 euros per year have been saved in the mortgage payment. Therefore, you will have paid 197 euros more in life insurance. In short, choosing the bank has cost 77 euros more per year and no advantage .
How to cancel life insurance from banks
Mortgage law allows entities to require life insurance to grant a mortgage. However , the client has the right to choose with whom to contract it . Banks cannot force you to choose the policy they sell, but must give you the option of choosing the one you want. They will remind you that you will not be able to get the «bonus» in the interest rate, but it is important that you have done numbers to see if it really pays off.
If you already have the insurance with your bank, you can cancel it and switch to another company whenever you want . To do so, you just have to meet these requirements:
- Notify, at least, with 30 days in advance. If not, the contract will be automatically renewed and you will be charged next year's premium.
- Send a written document in which you inform that you do not want to renew coverage. All your data and those of the policy should appear in it. It is best to send it by burofax or certified mail, so that it is recorded that they have received it.
Save on life insurance
According to INESE data, the difference in the price of life insurance from banks and insurers is more than 200 euros per anus. There are no reasons not to save if you have the insurance with the bank: you can leave whenever you want. And, if you are thinking of getting one of these policies, saving has never been so easy.