05/09/2020
What Is Mortgage Redemption Insurance or MRI?
When applying for a housing loan from a bank, you would be asked to get a mortgage redemption insurance or MRI. An MRI is a form of life insurance that pays off a part or the whole of the insured’s outstanding mortgage balance in case of his or her death or total disability.
Many may not agree to shell out thousands of pesos for an MRI, as they feel they already have enough payments to deal with. Some think that it’s just an added expense, they are confident that they are in absolute good health and have the most stable job in the world. But an MRI, in fact, protects not just the bank, which the insurance guarantees that it will be paid back the amount it has lent, but also the borrower’s surviving family, as it will help settle the outstanding housing loan amounts. In the absence of an MRI, the bank or lender may collect the remaining loan balance from the family or sequester the house from the surviving family. A very unlikable situation that some of our Filipino families are experiencing now, because of no life insurance and MRI.
If you have an existing life insurance policy, you can assign your policy as your MRI. Well, that would only apply if the proceeds equal or exceed the loaned amount. If you have none, the bank will require you to get an MRI, which usually will be incorporated to your housing loan in lump-sum payment (one-time premium paid annually).
Other people hesitate to get an MRI as it gives them an extra expense, which by the way is considerable. However, with that single investment, you might be saving your family from wallowing in debt or losing the home you have tried to provide them with.
Just like any other investments, you have to protect it with insurance. For the record, MRI is not fire insurance. Fire insurance may be added to your property insurance and also insurance that includes protection from acts-of-God. But definitely, MRI doesn’t mean fire insurance.
