MORTGAGE INSURANCE 5 I 



his disposal. He mortgages the property he has bought for the remaining 

 1,500 pesos, the loan being repayable in thirty years. 



During his lifetime he paj^s the fixed annual instalments punctually, but 

 after six A^ears he dies. In the course of his life he has amortized 130.56 

 pesos which is to sa}' that at his death he still owes 1369.44 pesos. Can his 

 family still fulfil the obligation of the mortgage, namely make an an- 

 nual payment of 123.38 pesos for the twenty-four years which have still 

 to run before the obligation is cancelled ? There would not be this doubt 

 if the individual in question had guarded against the eventuality of his early 

 death b}' insuring his mortgage, in the manner which we will explain, at 

 the same time as he mortgaged his property. The Insurance Bank would 

 in this case have issued a pohcy by which it engaged to pay, to the heir or 

 heirs named therein, a sum equal to that needed by the terms of the mortgage 

 to pay the debt remaining a burden on the property from the time of the 

 mortgager's death until the conclusion of the term of the mortgage. 



Further it is an essential condition of the mortgage in question that 

 the obligation assumed by the bank remain valid in spite of any delay of the 

 payments by the mortgager to the mortgagee, and in spite of payments in 

 advance which he may have made or his sale of the mortgaged property. 

 Thus the bank's engagement subsists for the period of thirty years and its 

 effectiveness cannot in any way be lessened within this period. The insu- 

 rance is therefore essentially a life insurance lasting for thirty years, in 

 virtue of which — in relation to the mortgage which gave it birth ~ the 

 bank must pay to the heirs of the insured person, if he die within the thirty 

 years and whether or not he has repaid the mortgage del:)t or sold the pro- 

 perty, the amount of the annual payments still pending at the time of his 

 death. In other words if the mortgager die after six years of insurance, as 

 we assumed previously, his heirs receive the sum of 1369.44 pesos even if 

 he have repaid his debt or sold his propert3^ 



The costs accompanying this form of insurance are low, as is shown by 

 the tariff which we give below, and they vary with the amount of the debt 

 and the age of the borrower. In the case already cited the mortgager in 

 order to insure his debt would have to pay one premium of 91.76 pesos or 

 the following annual sums : 



ist. year 33.63 pesos 



2nd " " . . . . 26.91 " 



3rd. " 20.19 



4th. " 1347 



5th. •' 6.75 



§ 2. Terms of insurance. 



The following are the principal terms of the policy : 



a) This contract is in force from the time of the payment of the single 

 premium or the first of the five annual instalments into which, if the con- 

 tracting person wish, this single premium can be divided. 



