Banks often make mortgage insurance a mandatory condition for issuing a home loan. This measure is prescribed in Article 32 of the Federal Law (No. 102-FZ). Each financial institution offers its own version of insurance - for housing, health, or the loan itself. The cost of such services can be impressive, and clients often, having concluded an agreement, want to refuse them.
Is it possible to return mortgage insurance, and how to do it correctly? The return process is complex and has its own characteristics, because not a single bank is interested in returning funds to the borrower. Even if the contract states that a return is possible, it may be refused without explanation. If this happens, go to the lawyers and file a lawsuit.
Can I get my mortgage insurance back?
It is worth noting that there are special legislative provisions according to which every borrower can return loan insurance. All this depends on the timing of concluding a general agreement with the insurance company chosen by the borrower, as well as the presence of an insured event. During the first month after concluding a mortgage agreement, the future borrower can refuse an individual insurance policy and issue a special return. Moreover, if the contract has been concluded but has not yet entered into force, the amount intended for insurance can be returned in full. If the contract has already been concluded, the insurance return procedure may take up to 3 months. In this case, the borrower will most likely be able to return only 50% of the amount paid.
Mortgage insurance refund methods
In some cases, a personal insurance contract may be concluded, as well as a collective agreement. It is worth noting that, according to the law, in 2021 it became possible to return the general part of the insurance within 5 days from the date of signing the mortgage agreement. If this period has expired, it is necessary to familiarize yourself with the terms of the contract, which stipulates the detailed conditions of the insurance program. In standard cases, companies can return up to 70% of funds for the entire unused period. But this system operates provided that the mortgage loan is fully repaid and no insurance events occur during the payment process.
Also, the borrower can return the insurance payments made at the time the loan is valid, but the bank can significantly increase the mortgage rate.
Tax deductions for insurance when lending
As a rule, banks issue long-term, large loans subject to insurance (life, property, civil liability or a comprehensive product). Is there a tax refund for insurance when taking out a loan to buy a home?
Art. 219 of the Tax Code of the Russian Federation (clause 4, clause 1) provides for tax reimbursement to individual taxpayers at a rate of 13% only for life insurance , if:
- The policy validity period is from 5 years;
- The insured and the beneficiary are one person - the borrower (or his spouse, children, parents). If a bank is indicated as the beneficiary in the insurance, it is impossible to receive a personal income tax refund;
- The insured person works and makes insurance contributions from his own funds throughout the year.
The maximum deduction for the taxable period is 120,000 rubles, that is, you can reduce the tax base by this amount. Refund for life insurance - 120,000 x 13% = 15,600 rubles.
For example, in 12 months you earned a net 800,000 rubles. From this money we paid personal income tax 13% - 104,000 rubles, paid for the insurance of the voluntary housing association - 60,000 rubles. Your expenses are within the established tax base. Reimbursement is 60,000 x 13% = 7,800 rubles, which you can receive annually during the policy period.
If several risks are included in life insurance, a tax deduction is provided only in part of the amounts paid for the risk of death (loss of ability to work). Accidents, illnesses, and loss of property are not compensated (clarification of the Ministry of Finance dated July 11, 2016 No. 03-04-07/40502).
When providing mortgage lending, lenders often use comprehensive insurance—personal and property—to protect risks. If the insurance does not indicate the amount of life insurance premiums as a separate line and the bank is indicated as the beneficiary in the mortgage policy, it will not be possible to return the tax (clarification of the Ministry of Finance dated December 14, 2016 No. 03-04-07/74700).
Tax deductions apply only to life insurance, pension, voluntary health insurance, and voluntary pension insurance contracts.
What will you need?
To write a corresponding application to an insurance organization, the borrower will additionally need to collect a standard package of documents:
- personal passport;
- a completed bank statement confirming early repayment of the mortgage loan;
- individual loan agreement;
- a certificate confirming the complete removal of the encumbrance from the apartment;
- insurance policy;
- individual application for a refund (must be drawn up in 2 copies).
All this must be provided to the insurance company.
, the name of which is specified in the contract for the provision of insurance services.
Factor K
The K coefficient is called differently in different insurance contracts. The essence of this coefficient is that it is a coefficient that describes the insurance company’s expenses for conducting business. It is measured as a percentage, and in the formula it is taken into account in tenths, i.e. divided by 100 There are different names for this coefficient
- Coefficient of insurance acquisition costs, percent
- Correction factor
- Share of acquisition costs in the insurance premium
This ratio includes the agent’s commission, other acquisition expenses, and expenses for servicing insurance contracts.
Step by step instructions
Drawing up and writing a standard application
After the personal package of documents has been collected, it must be submitted to the financial institution, and it is additionally important to write an individual application for the return of insurance. The application filled out by the client can be sent directly to the insurance company, as well as to a credit institution if the insurance was carried out by the financial institution itself. It is necessary to document the name of the bank that issued the loan, as well as the date of conclusion of the main mortgage agreement. The application must clearly indicate the reason for the total refund of the awarded insurance premium (this conclusion is written when paying off the mortgage early).
In any case, it is worth using a standard application, which includes all the necessary official data. The form must be downloaded from the official website of the institution where the loan was issued, or from the website of the insurance company. It is worth noting that the application will be considered within 10 days; after this period, the borrower will be provided with complete information about the status of acceptance of the application.
It is important for the borrower to contact the insurance company in time to receive a special payment.
Step 2 involves two options:
- The insurance company may voluntarily agree
to pay the funds; in this case, the transfer occurs on a contractual basis in a pre-trial manner using the details provided. As a rule, payment is made within one month. - The second option involves the borrower directly going to court
if the insurance company refuses to make a payment. In this case, it is necessary to require written confirmation of the insurance company’s refusal - the borrower will need this information to go to court.
It is necessary to draw up an official claim with a mandatory reference to the Civil Code of the Russian Federation No. 958, and it is important to ensure that this paper is necessarily registered in the organization’s incoming documentation. According to practice, more than 80% of court hearings in insurance cases result in the court siding with the borrower.
Insurance premium refund guarantees
However, there is also optimistic news: Law No. 483-FZ contains some important client guarantees. If a borrower who paid for collective insurance and refused it during the “cooling-off” period submits an application to remove him from the list of insured persons, then the bank (or another company that connected the client to this insurance in the interests of the credit institution) must reimburse the client absolutely all costs for connection: and the fee for it, and the commission, and the insurance premium. For more details, see Part 2.5 of Art. 7 of the Law “On Consumer Credit”.
In case of purchasing individual insurance, the client’s refusal within two weeks gives him the right to a full refund of the insurance premium. This provision is reflected in paragraph 11 of Art. 11 of the above law.
Returns, in both cases, must be made within seven working days. And it is possible only on the condition that there were no previous events that could be classified as insured events.
From September 1, 2021, when providing insurance services to borrowers to secure a loan, they must be informed about:
- the essence of this service;
- the maximum amount of payment (with premium, fee for joining the insurance contract, commission and other expenses) for the service or the ratio of these payments and the amount of the insurance premium;
- the right to refuse insurance for a period limited to two calendar weeks (to do this, it is enough to send an application for exclusion from the list of insured persons to the bank or other person acting in its interests).
P. 2.2. Art. 7 of the Law “On Consumer Credit” confirms the obligation of banks to issue loans without joining the insurance program, but at an increased rate (except in cases where personal insurance is strictly mandatory).
However, this guarantee has little relation to reality: not a single regulatory act of the Russian Federation contains a provision on mandatory personal health and life insurance. But its voluntariness is mentioned in the “Review of judicial practice in civil cases related to the resolution of disputes regarding the fulfillment of loan obligations,” approved by the Presidium of the Supreme Court of the Russian Federation on May 22, 2013 (clause 4), and in the Civil Code of the Russian Federation (Article 935). It is mandatory to insure only the collateral if we are talking about a mortgage (Clause 1, Article 31 of Law No. 102-FZ of July 16, 1998).
How to avoid possible problems when returning?
When concluding an initial contract with an insurance company, you must be careful - many organizations indicate in fine print provisions according to which they are not responsible for comprehensive reimbursement of the total amount under the insurer's policy. Also, when carrying out the insurance return procedure, you must carefully fill out an application and download it only on the official website the company that issued the insurance. It is important to register all documentation received at the insurance company’s address - any application forms and documentary reporting will definitely be needed when filing a claim in court.
Dangerous turns from insurers, or how to protect yourself
Insurance companies have a unique approach to the preparation of policies. On the one hand, they need to attract clients to take out a policy, on the other hand, they do not want to have financial responsibility. The best lawyers are involved in drawing up policies, which allows insurers to draw up policies in their favor with minimal risks.
Bank clients understand the situation very well, but many have no other choice and are forced to agree to the terms of the loan, i.e. drawing up a policy.
Neither the bank nor the insurance company denies the client’s right to engage his own lawyer and add the necessary clauses/remove existing ones when drawing up the insurance contract. This approach will help save money already at the time of its conclusion.
How to get money back for Piotek life insurance?
The borrower should always remember that the life insurance procedure is voluntary - none of the banking institutions has the right to impose this service. But we should not forget that this insurance, in the event of an insured event, can significantly protect the client and the bank from significant financial losses. Thus, the client independently decides whether to purchase this insurance or first refuse it at the stage of applying for a loan.
If the mortgage loan was closed by the borrower ahead of schedule, he has the right to return the insurance money for the unused period. To do this, you need to write an application directly to the banking organization or contact the insurance company. At the same time, it is important to re-read all the clauses of the insurance contract, since different organizations may provide individual conditions for the return of insurance.
It is also important to prepare a preliminary certificate containing a statement that the mortgage loan has been fully repaid. Only together with a certificate and a corresponding application can the borrower contact the representative office of the insurance company to consider the application. It is worth noting that all documentation can be analyzed and checked in detail within 30 days, after this time the company makes a decision - most often the insurance organization agrees to return the funds, which are transferred to the client’s personal account, the details of which are indicated in the application. If the parties disagree, the borrower always has the right to apply to the courts to confirm his rights to insurance payments.
You should read the contract carefully - in some cases, life insurance is a mandatory condition for granting a mortgage.
When applying for a mortgage loan, many banking organizations may impose insurance services without the client's consent. In this case, you can always get a refund for pre-imposed insurance. The insurance contract will be considered invalid - since all actions to obtain insurance can only be carried out voluntarily. The borrower can submit a corresponding application for termination of the imposed insurance within 5 days - as a rule, the insurance organization agrees to make payments. If the company disagrees, you can go to court, having first collected a complete package of all supporting documents.
Subtleties of the return of the insurance premium upon early repayment of the loan
But there is also bad news. The law introduced the concept of an insurance contract, which was concluded for the borrower to fulfill its contractual obligations on a consumer loan or loan - in accordance with Part 2.4. Art. 7 of the Law “On Consumer Credit”.
Therefore, not all insurances are subject to return, but only those that ensure the fulfillment of the loan. This is the problem for the client: not all insurances meet this criterion, since not all of them were concluded to guarantee the fulfillment of debt obligations.
Let's look at a practical example. The borrower needed a loan of at least RUB 300,000. September 1, 2021 has already passed, he turned to PochtaBank and successfully received this loan, but at the same time he was imposed a life insurance policy in the amount of 135,000 rubles. from AlfaStrakhovanie-Life. Thus, the value of his loan increased to 435,000 rubles. Not knowing the intricacies of the law, the client was in no hurry to refuse this insurance during the “cooling off” period.
The loan he took out was of no use to him, and the original amount was 300,000 rubles. he soon returned the jar. After re-reading the contract, he discovered with horror that he was not entitled to a refund of the insurance premium upon early repayment of the loan, even partial, since the insurance did not fall under the definition of “concluded to ensure the fulfillment of the loan.” In order for the premium to be returned, the loan would have to be repaid in full by paying another 135,000 rubles.
Of course, he did not want to lose this amount. But in order to start the refund procedure, he was forced to pay this money out of his own pocket - only then would the bank issue him a certificate of full repayment of the debt.
The Central Bank of the Russian Federation, as expected, took the side of the insurance company, since the policy sold did not provide this loan in any way.
The outcome of the case is still unknown. Other options remained untried, for example, appealing to an authorized financial court.
Keep in mind that after November 28, 2019, a client of a financial institution can sue the insurance company only when he receives a decision on his appeal from the financial ombudsman. This provision is fixed in paragraph 4 of the “Review of the practice of courts considering disputes arising from relations on voluntary personal insurance related to the provision of a consumer loan,” approved. by the Presidium of the Supreme Court of the Russian Federation on June 5, 2019, and in Federal Law No. 123-FZ “On the Commissioner for the Rights of Consumers of Financial Services” dated June 4, 2018 (Part 2 of Article 25, Part 6 of Article 32).
It is not necessary to contact all other authorities (for example, Rospotrebnadzor and the Central Bank).
I wouldn’t like to think about sad things, but we have to admit that both credit and insurance organizations are actively exploiting this loophole in the law, which allows them not to return the insurance premium even after September 1, 2020. They use encrypted conditions in the contract that are impossible to understand without the help of a lawyer. The contracts are deliberately drawn up in such a way that they cannot be unambiguously classified as insurance contracts to secure loan obligations.
Such voluntary-compulsory insurance is beneficial to both the insurer and the bank: they both receive income from it. This is all recorded in their internal terms of cooperation. At the same time, refusal to buy insurance increases the risk of not getting a loan at all, although the bank’s documents state the opposite: that insurance is voluntary and the decision to issue a loan does not depend on it (although the loan rate does depend). That is, the conditions for registration of receipt will actually be different for those who bought insurance and those who refused it.
This is not explicitly described anywhere - on the contrary, something completely different follows from the loan agreements. It seems that on paper there are some conditions, but in reality they are different.
There is another significant flaw in this law: if the borrower refuses collective insurance, repays the loan early and asks to be excluded from the list of insured, then he can only count on a refund of the insurance premium and only for the upcoming period until the end of the loan term (see p. 10 Article 11 of the Law “On Consumer Credit”).
In reality, this premium often turns out to be the smallest expense item compared to all other payments: bank commission, connection fee, etc. These payments can only be returned in the traditional way - through the court (see Article 32 of the Law on the Protection of Consumer Rights ").
