IN response to a reader’s query as to why life insurance and the collection of premiums for peril insurance are added costs in the mortgage transaction, Jamaica National said that the coverage relates to risk reduction and a more streamlined process for mortgage applicants.

In response to another article on the subject of insurance in September, the reader commented, “Another case that needs looking into is JN, where mortgagors are FORCED to insure properties through JNGI and refuse mortgagors who fail to produce insurance certificates confirming that the property is covered.

“You must pay the premium which is tacked on to your mortgage. Additionally, they refuse life policies currently in force assigned to the mortgage. You are FORCED to take a life policy through another subsidiary, JN Life. This is so unfair.”

The company, in comments after viewing the response shared, said that when seeking a mortgage to purchase a home or property, peril insurance is very important, as it protects the mortgagor against financial loss in the event of any insurable damage.

“It is also required by law,” it was stated.

In the written response provided to the Jamaica Observer it was outlined, “During the JN Bank mortgage application process, applicants are provided with the option to purchase peril insurance for the property being mortgaged from one of six general insurance companies, including JN General Insurance Company.

“It is far more efficient for JN Bank to collect the peril insurance premiums to cover the property. This also results in cost savings for mortgagors. We collect 1/12th of the annual premium monthly to ensure that the next annual premium is always available.”

It was noted that if a JN mortgagor does not wish to make the 1/12th monthly payment, he or she could opt to ‘pre-deposit’ the next due premium in advance each year.

In relation to life insurance, the company said that at JN Bank, life insurance is recommended to protect the mortgagor and his or her heirs in the event of any insurable life occurrence that may prevent the mortgagor from meeting his or her monthly payments.

Applicants are provided with three options during the application process. They can elect to assign any assignable life insurance policy (the value of which must cover the mortgage amount), opt for mortgage life coverage, or proceed without any life insurance coverage.

In the absence of life insurance, the applicant’s family might lose the property if payments cease after death. With life insurance that covers the mortgage obligation, the property becomes that of beneficiaries and no further payments should be required.