Originally it was the assignments of the fifth of the salary (i.e. those loans repayable in monthly installments that did not exceed 20% of the salary, the quota paid directly by the employer), which provided for a life insurance policy. Since these loans were supported by the stable employment relationship as the only guarantee, the need to collect all the repayment installments was prefigured. The only events that could prevent user payment were user death or job loss. In support of this, a specific insurance formula was studied which the user must underwrite in order to access the credit disbursement. The relative amount is obviously borne by the debtor and is spread on the first installments, together with the interest portion, that is, it is included in the costs of the APR.
How to pay debt
In case of death of the debtor or loss of the job of the same it is the insurance company to pay the remaining debt to the bank and the heirs have no restriction on the assigned capital. In essence, the insurance policy guarantees both the bank and the successors of the debtor (if extinguished before the balance).
Subsequently, the credit coverage policy or CPI (Credit protection insurance) was increasingly used, also in the face of other forms of financing and today almost no loan is disbursed in the absence of such coverage.
Especially for large amounts (over € 50,000) and for long repayment periods, the survival expectancy must be well assessed at the time of a loan agreement. The repayment capacity currently ranges from 18 to 75 years and is considered the age beyond which any form of financing should be extinguished. That is, the refund must be completed within the 75th year of age.
However, the ICC does not cover the risk of death if this occurs:
- for suicide of the insured within two years from the signing of the contract;
- due to death of the insured following serious illnesses hidden or worse, hidden at the time of financing;
- if the death of the insured occurs following his deliberate participation in harmful or malicious events.
Conceptually, the more advanced the age of the contractor, the more guarantees are required regarding the state of health.
In the event of the death of a borrower, if covered by a CPI policy, the heirs will have to worry about nothing, as the insurance will take on the residual debt. In the absence of such coverage, the heirs must reimburse the residual part of the debt.
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When such a situation arises, successors are forced to take on the remainder of the mortgage, often resorting to further new financing and produce a new mortgage in favor of the lending institution.
This can be a critical moment as the mortgage holder is often also the main income producer, in the absence of which it is possible that the heirs are unable to bear the installment costs and are forced to give up the property; in this case the credit institution (currently the owner of the property in all respects) will resort to the auction of the house, due to default.
However, should the inherited apartment be used as a main residence (first home), successors in difficulty may request the suspension of installments of up to 18 months and access to the Consap solidarity fund. This practice is applicable to any form of uninsured loan. The current laws establish that the debt goes in succession to the heirs in a percentile proportion, unless the property purchased thanks to the loan is renounced.