Securing construction financing with RVL

I have now chosen the following model...insured myself as the main earner for (almost) the entire insurance sum, linearly decreasing over 30 years. I thought about whether to choose annuity or linear for a long time. However, linear was cheaper, and I don’t know what the interest rate will be for the follow-up financing with the annuity option. Due to the long term, I was able to somewhat compensate for this. Special repayments make it work anyway. What do you think about linear vs. annuity decreasing? My wife, on the other hand, is constantly insured with 200K over 20 years. Hopefully, that should be enough.

Our RLV is also linearly decreasing. Whether the RLV covers the exact outstanding amount in case of insurance is not relevant for me. Parallel to our construction financing, we are also building assets in other asset classes, which should compensate for a possibly occurring gap.

I do not understand. Why do you want to cover the house loan with the RLV instead of putting the annual contribution into special repayment?

If you are healthy, such a RLV may cost about 30 EUR per month. 360 EUR more or less repayment per year is almost irrelevant for the loan amount, while the default of a borrower often equals the loss of the house, which you might want to prevent at least during the child-rearing period. It is a risk life insurance and not a capital-forming life insurance (does anyone still take that out nowadays at all?).

I don't understand. Why do you want to cover the house loan with the RLV instead of putting the annual premium into the special repayment?

Insurance spreads the risk of an individual across the community. It never "makes sense" for the insured as long as the insured event does not occur. A cost/benefit calculation is therefore not meaningful. I don't understand how a special repayment helps you in the event of death? You will hardly be able to repay 500k in the first year if your partner dies in the first year (<- but that is exactly the insured risk).

If it is in the first year, then the RLV wouldn't pay anyway because of the blocking period. :)

But even assuming I have no RLV and the partner dies, the house will be sold to pay off the loan or it will be refinanced or the bank will be spoken to. No idea, something will be found somehow.

No idea, something will somehow turn up.

"No idea" fits quite well ;)

It doesn't always have to be fully secured. For example, I also consider the full loan amount to be too much. For us, both of us are insured for €100,000 over 25 years. That costs us €40 per year per person...

In case of emergency, the surviving person then has a buffer so that they can calmly deal with the property after the mourning period and then determine their needs.

If something happens to you, your survivor has one less income, but the loan must still be serviced immediately and the children must also be cared for... The risk is not worth less than 1 euro per week to me.

PS: With us, the term life insurance was a condition set by the bank, but it did not have to be taken out through them.