Return of mortgage insurance upon early repayment of loan

When applying for a home loan, clients are faced with strong recommendations from a Sberbank employee to purchase an insurance policy. A mortgage loan is a credit product that requires insurance. But its object can be both the collateral and the borrower himself. The belief that personal insurance will reduce the rate is becoming fundamental for many borrowers. Some clients have a realistic idea of how much their monthly payments will increase, but do not try to conflict with the lender, wanting to get favorable loan conditions. And then they ask how to get their Sberbank mortgage insurance back. Such a desire is completely legal, but requires taking into account some nuances.

If the borrower does not have a chance to avoid insuring the apartment, then there is an opportunity to save on the amount of premiums

Can I get my insurance back after I pay off my mortgage?

All possible ways to return unused insurance funds are usually specified in the insurance contract. Insurance institutions do not focus clients’ attention on these points in order not to lose money, but by law such opportunities must be provided. Please read the insurance contract carefully. It specifies all the possibilities for returning unused funds. If there are no such provisions in the insurance contract, they can be found on the web portal of the insurance institution. You need to study the public agreement between the insurance company and the client posted on this portal.

Standard requirements for the return of unused funds under an insurance contract:

The mortgage loan must be repaid early and in full.
To issue a refund, the client's application must be drawn up within a certain period from the date of repayment of the mortgage loan. Typically this period is one month. Don't delay submitting your application! If you are late in submitting your application, you will not be able to return any unused funds.
Not a single institution operating in the insurance industry will return more than 40% of the insurance funds. Please take this into account when paying off your mortgage. If you pay back your mortgage too quickly, you may not be able to get back some of the insurance money.

However, you can return the money in full. The entire insurance amount is returned to the client who repays the mortgage loan within the first month of the loan agreement. The amount is also refunded if the client decides to insure the apartment with another organization. In both cases, all money paid for insurance is returned. The company deducts from the amount only expenses incurred during the registration of insurance.

Procedure for returning insurance amounts

You can get your money back in two ways:

Contact the banking organization where the insurance contract was concluded and the loan capital was issued.
Go directly to the nearest representative office of the policyholder - the company that provided the insurance policy.

In both cases, you will have to fill out an application and prepare a package of documents. Please note that the insurance return application form is not unified. Each organization may request an application drawn up on individual company letterhead. You can obtain the form from your bank or insurance company.

In addition to the written application, the following documents will be required:

Passport of a citizen of the Russian Federation.
A valid insurance policy or contract.
Documents confirming the fact of payment of the debt (receipts, checks or certificate from a banking institution).
Receipt for payment of insurance premium.

Please note that some companies may require additional information and documents. An exhaustive list can be specified upon request.

Types and options of insurance when applying for a loan

It is also important to understand what exactly you are insuring. When taking out a mortgage loan, there are three types of insurance:

Client life insurance . With this insurance, the bank compensates for losses in the event of the sudden death of the borrower or his death from an accident.
Apartment insurance . This insurance compensates for standard risks of damage to the apartment: fire, flood, flooding of the apartment by neighbors, etc.
Insurance of the borrower against loss of ownership of the apartment . Under such an agreement, compensation will be paid to the client if anyone contests the fact of purchasing the apartment. This type of insurance is called title insurance.

The bank seeks to impose all three types of insurance on the client. This is beneficial for both the bank and the insurance company. In addition, the bank and the insurance company can be partners. But according to the law, the bank has the right to require only apartment insurance, and life insurance and title insurance are not mandatory. The client can refuse them.

Let's understand the situation: what is credit insurance?

Not many citizens know that insurance is not a requirement. According to current laws, only property that is transferred to a banking organization as collateral is subject to insurance (). The remaining proposals for insurance of credit money are the net profit of the bank and the insurance company.

Consequently, the client has the right to refuse loan insurance. This is his personal and legal right. However, banking institutions in this situation simply refuse to provide a loan or establish enslaving terms of cooperation. Therefore, most citizens agree to purchase an unnecessary insurance policy.

IMPORTANT!

You can get your money back for the imposed policy! We talked about how to do this correctly in a separate article. Today we will tell you how to apply for a refund of loan insurance in case of early repayment.

How to get your insurance back after paying off your mortgage

Now let's move on to practice and explain how you can get your insurance back after repaying your mortgage. The procedure for returning insurance is as follows:

The client repays the mortgage loan before the payment is due. Having deposited funds, the client needs to obtain a certificate from the bank stating that the mortgage has been repaid ahead of schedule. Registration of such a certificate may take up to thirty days.
The client contacts the representative office of the insurance institution, having in hand a certificate from the bank. The insurance company and the bank are independent organizations; bank employees will not be able to return insurance funds to you. The client needs to find out the address of the insurance company’s representative office and contact there.
At the representative office of the insurance company, the client draws up an application for the return of funds. The application must be accompanied by a certificate from the bank confirming the early payment of funds received under the mortgage loan, as well as other required documents. The application is accompanied by a bank account number for transferring unused insurance funds.

The client is awaiting a decision from the insurance company on the return of funds. The decision must be made within a reasonable time. If the period is not specified in the insurance contract, it is a month.
If a positive decision is made, the money is transferred to the account specified by the client in the application. After this, the client can use them for his own needs.

If the insurance company stubbornly refuses to return the money and refuses to pay, you must request a certificate indicating the reasons for the refusal. Having such a certificate in hand, you can go to court. When drawing up a statement of claim, you must attach the same documents as when applying to the insurance company.

If the amount you need to return is large enough, you should contact a lawyer specializing in insurance law or hire a lawyer. The application to the court must include a demand for compensation for losses incurred during the trial.

Mortgage at Sberbank: what to do if an unfavorable event occurs?

Algorithm of actions:

Make sure that the event that occurs is included in the list of insured risks (the corresponding list can be found in the insurance agreement);
Collect a set of necessary documents confirming the occurrence of an adverse event (this must be done immediately after the insured event);
Visit a Sberbank branch and hand over the collected papers to the manager.

A package of documents will be transferred to the insurance organization. Based on an analysis of the received papers, the specialist will make a decision on payment of compensation. If the policyholder has any questions, he can call the customer support service or go to the Sberbank website.

The fact of an accident requires documentary confirmation. To receive financial compensation, you must provide the following documents:

A certificate containing a calculation of the amount of debt under the mortgage agreement as of the date of the insured event (the paper must be certified by the seal and signature of an authorized bank employee);
Questionnaire;
Death certificate or other document certifying the occurrence of a fatal outcome (a report of a forensic medical examination of the body, an autopsy report, the results of a chemical examination, etc.);
A fragment of a medical card or medical history for the last 60 months. The document must contain information about established diagnoses, treatment methods, time of hospitalization, indicating the timing and dates of medical measures. If the patient was sent for a medical and social examination (MSE), then you need to take a certificate indicating the reasons and date of the examination;
Report on an accident that occurred at the enterprise (form H1);
Protocols describing the reasons for the occurrence of an insured event (issued by the Ministry of Emergency Situations and the Ministry of Internal Affairs);
Certificate of determination of the first or second degree of disability (issued based on the results of the ITU);
Pension certificate (payments are assigned in the event of permanent loss of ability to work);
Referral to undergo a medical examination (issued by a medical institution);
An examination report signed by members of the medical commission;
Results of analyzes and laboratory samples.

These documents are drawn up in Russian. If an adverse event occurred on the territory of another country, then the papers must be drawn up in accordance with current legislation and translated into the state language of the Russian Federation. A Sberbank client who has purchased insurance can use telemedicine services. The borrower can get advice from a doctor using the Internet.

This approach has a number of advantages:

Significant time savings (no need to go to the hospital);
Competent specialists;
Variety of communication channels (corporate portal, mobile software, conversations on a cell phone).

A client who decides to use telemedicine services must do the following:

Follow the special link and register;
Log in to your electronic account and enter a one-time password in the appropriate field;
Click on the “Call a doctor” button.

Remote consultations can be obtained 14 days after the conclusion of the contract. Patients are received online 24 hours a day, without holidays or weekends.

Refund of mortgage insurance at Sberbank

How to return the insurance in case of early repayment of the loan depends on the terms of the insurance contract concluded when the loan was issued. Such insurance is a service that is imposed on a daily basis by banking organizations when registering borrowed capital. Some banks completely refuse to lend if the client does not want to pay for insurance. The good news is that you can return it. True, with some reservations.

How to return imposed mortgage insurance?

In the psychology of Russians, one of the characteristic features is the manifestation of timidity in front of financial institutions. Having received the loan agreement in our hands, we are in a hurry to sign it or are embarrassed to ask for clarification of unclear points. Because of our timidity and inattention, the bank may impose insurance.

You can get your money back for imposed Sberbank mortgage insurance. According to the law of our country, insurance imposed on a client without his consent is considered invalid.

Life and disability insurance for clients at Sberbank, as in other banks, is voluntary. At any time, the borrower can apply for its termination and receive the unused amount in hand. But insurance of property purchased with a loan (car or apartment) is required. Here we can talk about a refund. Only after all funds received from the loan are returned. The procedure follows the algorithm described above.

There is no need to be afraid that the return of insurance funds will ruin your credit history. According to the rules for working with loans, information about transactions with insurance is not entered into the credit history. A banking client has the right to request information about his credit history from Sberbank once a year for review. If you are not satisfied with certain entries, you can protest them through the bank administration, and in case of refusal, through the court.

You can return mortgage insurance at VTB 24 Bank on the same principles as at Sberbank. When repaying a mortgage loan early, the client receives a certificate from the bank stating that the loan has been fully repaid. With this certificate in hand, the borrower applies to the representative office of the insurance company that serviced the insurance contract. Upon receipt of the application, a bank specialist reviews the application and the documents attached to it within a month. After this, a decision is made to return the money for the unused period, and the remaining amount is transferred to the bank account that the borrower indicated in the application.

Like Sberbank, VTB 24 does not have a mandatory requirement for life and disability insurance for the borrower. But real estate purchased with a mortgage will have to be insured.

Insurance return methods

To return funds from insurance, you must submit an application to the bank itself (if it sells insurance packages) or to the insurance company. The second option is preferable because it allows you to resolve issues without an intermediary and receive only reliable information.

In case of early termination of the contract, an application for return of insurance is written at the bank office and attached to the client’s dossier. For example, at Sberbank insurance is issued for the entire term of the loan, so its return upon early termination is quite common. Please note that the money is returned at the request of the client, since the policy is concluded with an insurance company and essentially has nothing to do with the loan, it only protects financial interests in the event of insured events.

By the way, it is possible to receive a tax deduction on the amounts received. Thus, a mortgage and the interest accrued on it are, in theory, subject to personal income tax (NDFL), and, therefore, a deduction of 13% can be returned through the tax office. To do this, you need to fill out a declaration in the standard mode and submit documents to the Tax Office. Today, the procedure is also carried out electronically.

Let's get back to insurance. It is also possible to return it a year after receiving the loan, but it will be more difficult. And after repaying the loan, it is completely impossible, so contacting the bank must be timely. Therefore, when signing a contract, it is necessary to study it carefully. And not only the loan agreement, but also the insurance agreement.

How much is returned to the borrower?

The conditions for the return of insurance are often created not in favor of the borrower, and it will not be easy to get your money back in full. It largely depends on how long it takes for the borrower to file an insurance claim. What amount will be returned to the borrower depending on the timing of the application is stated in the table.

The deadline for submitting an application is from the date of registration of insurance	Refund amount
Up to 5 days	100% of the cost of insurance, subject to the conclusion of an individual insurance contract.
Up to 14 days	The entire cost of insurance.
After 14 days	100% is refunded if the insurance contract has not been concluded, otherwise the insurance company will independently calculate the amount to be refunded.
More than 1 year (if the loan is repaid early)	The refund amount is calculated individually for the borrower based on the period of use of the insurance.

It is allowed to return the insurance portion paid for an insurance contract if the contract was drawn up individually. If the borrower has signed an agreement to participate in the voluntary collective insurance program, then it will be very difficult to withdraw money from the bank and insurance company.

What kind of insurance are we talking about?

The content of the article

When concluding a mortgage agreement with Sberbank, the client is obliged to insure the collateral real estate against the risks of loss and destruction. According to the law, this insurance cannot be refused; in this case, the client’s refusal of this insurance will be equal to recognition of the contract as not concluded and bilateral restitution. In other words, Sberbank will withdraw its offer, and the borrower will not receive any money.

Along with insurance of collateral, the borrower is asked to insure his life and health. This insurance is purely voluntary, but you need to be prepared for the fact that a bank employee will strongly press the borrower, strongly recommending that you purchase the policy. On the one hand, this is a plus, since in the event of loss of life or health, the risks associated with paying mortgage premiums will be assumed by the insurance company. On the other hand, these are additional expenses, which, against the backdrop of mortgage payments, can be quite significant.

Insurance companies that sell mortgage insurance are subsidiaries of Sberbank.

Borrowers often take out both insurances without even knowing that only one of them is mandatory. Only with compulsory property insurance nothing can be done, but imposed life and health insurance can be refused, and refused after the conclusion of the contract.

Reasons for return

If the borrower decides to refuse insurance in the first days after signing the mortgage agreement, no one can interfere with him. This refusal can be considered the first basis for the return of money that was paid for the insurance policy. The refund mechanism will depend on the details. If the borrower pays the entire cost of the insurance policy at once, then he will receive the entire amount back in a lump sum. Well, if payment for the insurance policy is made in monthly installments, then the borrower will receive the first payment back.

You can terminate the life and health insurance contract later, after a month or a year. In this case, the borrower will be able to return only part of the funds paid for the insurance in proportion to the time of actual use of the insurance policy. Terminating an insurance contract early most often comes to mind when repaying a mortgage in full ahead of schedule. In principle, life and health insurance also applies to early repayment of a mortgage, so it is not necessary to demand repayment, but it is possible.

What is needed for this?

Nobody will simply return the insurance amount or part of this amount. It is necessary to perform a number of mandatory actions, the essence of which is as follows:

We come to the office of the insurance company and explain the situation;
We receive an application form for termination of the insurance contract and fill out the document;
We attach to the document the mortgage agreement, your passport, payment schedule, personal account statement and other documents that the specialist will request;
Then you need to wait until the insurance company reviews the application.

Usually you don't have to wait long - 14 days. But you need to take into account that, by law, the insurance company has a month in reserve for this type of action, and in exceptional cases 2 months. So you need to be patient. If the insurance company refuses to return the insurance, you can challenge its actions in a claim and in court, the main thing is to competently draw up a claim, and then a claim.

In conclusion, we note that it is very important to remember that a borrower who purchased an insurance policy for a mortgage loan from Sberbank is legally entitled to receive a refund in a number of cases. Do not fall for the tricks of employees, calmly and confidently defend your rights. And if any obstacles arise that are difficult to overcome on your own, hire an experienced credit lawyer, he will help. Good luck!

Conditions for early termination of the insurance contract

If you purchased an insurance policy when applying for a loan (regardless of whether you or the bank were the beneficiary of it), if you repay the loan early, you should try to return part of the insurance premium paid to the insurer. To do this, immediately after repaying the entire loan amount, you must contact the insurance company, providing:

a copy of the loan agreement;
passport;
a certificate from the bank confirming full repayment of the loan;
an application written to the head of the insurance company for early termination of the insurance contract and the return of part of the insurance premium.

Many borrowers make the same mistake: they do not contact the insurer directly, but the bank where they took out the policy. Such actions may be justified if insurance was included in the package of banking services (we will consider this point separately). In all other cases, if you want to quickly receive a response from the insurer and increase your chances of getting a refund of the paid insurance premium, it is advisable to immediately contact the insurance company.

The conditions for early termination of the insurance contract are described in detail in Article 958 of the Civil Code of the Russian Federation:

The insurance contract is terminated before the date for which it was originally concluded if, after its entry into force, the risks of an insured event have disappeared, or for other reasons, including:
in the event of termination of business activity by a person who has insured the business risk or the risk of civil liability associated with business activity.
The policyholder or beneficiary has the right to cancel the contract by submitting a corresponding application at any time, if by the time of refusal the possibility of the occurrence of the insured event has not disappeared due to the circumstances described in clause 1.
The insurer has the right to receive a portion of the insurance premium in proportion to the time during which the insurance policy was valid in the event of early termination of the insurance contract due to the circumstances described in clause 1.

The insurer has the right not to return the insurance premium (unless otherwise provided by the contract) in the event of early refusal of insurance by the beneficiary or policyholder (clause 2.).

It is worth paying attention to the second paragraph of clause 3 of Article 958: if the insurance contract is terminated at the initiative of the borrower (including if he repays the loan early), the insurer has the right not to return the previously paid insurance premium. However, despite this wording, lawyers, when challenging the insurer’s refusal to return part of the insurance premium, can use several “loopholes” that allow them to defend the interests of the borrower. We will tell you about them in more detail.

What is loan insurance

In order to understand the operation of this system as clearly as possible, you should understand the concept of insurance directly. Why does the bank need this document? Insurance protects a commercial organization from possible risks. By issuing money to the borrower, the bank bears many risks associated with unfavorable developments of the situation. The borrower may not return the funds received for a number of reasons. In this case, the insurance company, which is ready to compensate the bank for losses, will be responsible. The insurance percentage will depend on the amount of money received. The more money the bank issued, the higher the cost of insurance will be.

Why are banks interested in obtaining insurance?

Of course, in most cases, people taking out a mortgage are unhappy about the additional costs. But practice has proven the need for mortgage insurance. This agreement, in the event of force majeure events related to the property or the state of health of the borrower himself, relieves the client of problems with the bank. After all, different situations happen in life, and sometimes the borrower simply becomes unable to pay the mortgage.

Insurance can be returned through the court even after 14 days.

Insurance is also beneficial for the bank itself. After all, this service has quite a large number of advantages. In particular:

Provides financial security in the event of a situation when the client cannot fully repay the loan according to the schedule (due to health problems, loss of the main source of income).
If the borrower dies, his relatives will not have to take on the obligations of the mortgage (if they take out life and health insurance).
A mortgaged property is also insured against various disasters (fires, floods, destruction, etc.).

The borrower is required to be able to discern when taking out an insurance policy is truly an important necessity. And when can you refuse such a service? At the legislative level, due to the peculiarities of mortgage lending, it becomes necessary and obligatory to insure the property itself taken on loan, since Sberbank needs confirmation and collateral for the loan issued.

But a policy issued to insure the borrower himself (his health and life) becomes a desirable, but optional service. You can also refuse to insure your home title . But it is worth remembering that full registration of all proposed insurances gives the borrower an increased chance of getting a mortgage approved by the bank. Otherwise, the banking structure has the right to refuse a loan or increase annual rates.

It is worth remembering that the need for an insurance policy disappears when the borrower fully repays the entire debt on the loan taken out.

The bank does not have the right to refuse a client who is taking out a mortgage and wants to purchase insurance. In this situation, the future borrower has every right to appeal to the courts. Also, the borrower can refuse the insurance previously approved by him as soon as Sberbank has issued consent to receive the loan and apply for a return of insurance on the mortgage loan at Sberbank.

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What types of insurance can be returned to Sberbank?

Insurance is mandatory for secured loans. Subject to compulsory insurance:

Type of loan	Insurance program
Mortgage	— structural elements — title insurance
Car loan	CASCO
Target for the acquisition of property (non-residential premises, equipment)	property

If you refuse compulsory insurance, the bank may increase the interest rate, charge a fine or impose a requirement for early repayment.

You can terminate voluntary insurance without penalties:

life and health;
property of the loan owner.

Why do banks insist on mortgage insurance?

In standard terms, a mortgage is a loan issued by a credit institution for the purchase of housing or its construction. The loan is issued for a long term with an interest rate lower than a consumer loan. These details make bankers think about possible risks, the main one of which is non-repayment of debt. And many Finnish institutions do not risk approving an application if the client is unwilling to insure the property or increase the mortgage interest rate.

When taking out insurance, the insurer company acts as a guarantor in the lender-borrower relationship, i.e. guarantees debt repayment in case of unforeseen circumstances. Some banks have additional requirements - disability and life insurance. The text of the policy contains a complete list:

obligations of the parties;
insurance cases.

Taking out a policy for a mortgage loan is advisory in nature if it relates to life or health insurance. With regard to property, Russian legislation has established the right of banks to require compulsory insurance of the latter (Federal Law of the Russian Federation “On Mortgage”, Article 31 with the clause “unless otherwise specified in the contract”).