This is how you protect your partner when buying a house

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When you buy a property, you have a lot on your mind, but probably not your own death. As macabre as it sounds, this is exactly the case that owners should consider early enough, especially if they are fulfilling their dream of owning a home with the help of a loan. It can take many years, even decades, until this is paid off.

If one of the borrowers dies during this long time, this can put his partner in a difficult financial situation – especially if the deceased is the main breadwinner. It becomes particularly tricky as soon as children are involved and the surviving dependents are solely responsible for childcare and at the same time have to pay for the repayment of the real estate loan. If he cannot do this, in the worst case the home has to be foreclosed – a stroke of fate that mourners in particular can do without.

If you want to protect yourself and your partner in this case, you can take out term life insurance (RLV). Some credit institutions even request the policy from their borrowers when buying a home. The principle: if one of the two insured debtors dies, the insurance company pays a previously agreed amount to the surviving dependents. In contrast to a capital-forming life insurance policy, policyholders do not save anything, the benefits are only paid in the event of death.

Decisive factors: age and health

Elke Weidenbach from the North Rhine-Westphalia consumer center recommends the policy to anyone with obligations – be it children or a home loan: “As soon as you are financially responsible for someone else, term life insurance makes sense.” It is worthwhile precisely because it is affordable Don’t be stingy here. An example: The mother of a child insures herself against the death of her partner with an RLV and agrees an insurance sum of 200,000 euros and a term of 25 years. Your partner is 30 years old, an office worker and a non-smoker. Overall, a policy would be available from around seven euros per month. It becomes even cheaper if the insured pay annually instead of monthly.

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Health aspects play an important role for the amount of the monthly contributions. For example, those who smoke, have a serious pre-existing illness, pursue dangerous hobbies such as motorcycling or work as a roofer, for example, often either pay high surcharges or are refused from the outset. Under no circumstances should the insured person cheat with this information. “Correct information is important here so that the insurance company pays in the event of a claim,” warns Weidenbach. Another cost factor is age. The later you take out the insurance, the more expensive it becomes. It is therefore worthwhile to protect your relatives as early as possible.

As a rule of thumb for the ideal sum insured, experts cite three to five gross annual wages. If someone earns 50,000 euros a year, he should calculate 150,000 to 250,000 euros in the event of damage. However, the appropriate amount of the insured amount also depends on the life situation and should be calculated individually. When securing real estate loans, at least the loan amount should be covered, advises consumer advocate Weidenbach. “Funeral costs, training costs for the children and other running costs, for example for a car, should also be taken into account by policyholders,” she says. When in doubt, it is better to calculate too generously than too tightly.

Pay attention to the purpose

If you want, you can agree that the insurance benefits will decrease over the years – parallel to the remaining debt at the bank. At the same time, the monthly fees usually also decrease. However, couples should compare offers and see whether the savings are really worthwhile for them. If the price difference is only small, you should rather add the few euros a month for the linear tariff.

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When it comes to the term of the insurance contract, couples should think carefully about what purpose the term life insurance should fulfill for them: If you only want to cover your family until the house is paid off, you can only take out insurance for the term of the loan. However, if one of the two partners cannot pay for their living or the education costs for the children on their own even after the loan has been repaid, a longer term is worthwhile. Weidenbach then recommends coverage up to the age of 70 or 75, but at least until the start of retirement. With a longer term, however, the insurance premium increases significantly.

Unmarried couples in particular must not ignore one aspect of the RLV: inheritance tax. You already have to pay for this from a sum of 20,000 euros. Unlike married couples, they do not enjoy the exemption of 500,000 euros. You can avoid the tax with the RLV by taking out a so-called cross insurance. The policyholder is the beneficiary in the event of death, so he receives money when his partner dies. In this case, the money is not an inheritance, but an insurance benefit.

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