Mortgage Protection Policy: New Tools for Impawn

Type : Research Article

Authors

1 Assistant Professor, Faculty of Law and Political Science, Kharazmi University, Tehran, Iran.

2 Ph.D. Candidate in Private Law, Faculty of Law and Political Science, University of Tehran, Tehran, Iran.

3 M.A. Graduate in Islamic Studies and Law, Imam Sadiq University, Tehran, Iran.

Abstract

The ineffectiveness of the mortgage regime in our country has led legal writers to introduce alternatives to the mortgage so that the shortcomings of the current regime may be partially mitigated. One of these methods, which is still not prevalent in our country, is the use of the mortgage protection policy. It is not listed in the current legislation, nor are its provisions expressly stated; therefore, understanding this institution and its provisions can help make it more common. The mortgage protection policy is situated between property insurance and life insurance, possessing features of both institutions; however, it also has certain characteristics that distinguish it from life insurance and bring it closer to property insurance. In this type of insurance, the risk of non-payment of loans is transferred to the insurer, while the lender is designated as the beneficiary. In this institution, unlike other life insurances, investment is reduced, the investment amount equals the remaining debt, the payment of premiums is compulsory, and the beneficiary is irrevocable. Given the effectiveness of this contract in covering the risk of loan non-repayment, as well as its suitability for applicants, it is necessary to amend the rules on banking and loan contracts to further expand the use of this contract.

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‌ Timeline

  • Received: 03 October 2019
  • Revise: 04 January 2020
  • Accepted: 03 February 2020

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