The drama of being unable to pay
 What will happen if you cannot make your mortgage payments? Will the bank show mercy? Will you find a job in time? These are questions that can keep one awake at night because the answers are scary. If you don't miss payments, the bank will go after whatever collateral you have put up, or seize the mortgaged property. Quite an ordeal.

To avoid all this banks now offer clients a kind of insurance that is ideal for those who like protection: unemployment insurance.

In granting mortgages, banks and savings banks usually recommend (some even require it) taking out life insurance. This is so that the bank can recover the cost of the property if the debtor becomes incapacitated or dies. But since the mid-1990s, following the Anglo-Saxon example, Spanish banks are suggesting that clients incorporate unemployment insurance to this policy. For a percentage of the face value of the mortgage (between 1.1 and 2.0 percent) the bank will cover one's mortgage payments over a set period, usually 12 straight payments or 24 if they are not consecutive, or until the person finds work within those deadlines. Some banks offer this insurance for free as a way to attract clients over the long term.

This insurance is also offered to those who are self-employed, and is used in the event they become ill or are injured and cannot work.

Anything for the sake of safety
A variety of surveys carried out in the financial sector show that most people look favorably on the possibility of taking out unemployment insurance. They cite security, so important to the human race. But that's just theory. In reality this kind of insurance is not particularly popular among the Spanish people. The only ones who usually take it out are those with highly demanding mortgages.

Banks like this kind of insurance because it reduces their risk, minimizes late payments and boosts their revenue. It provides clients taking on the adventure of a mortgage with a degree of security when it comes to employment, even though it does mean an additional added cost up front. It makes the purchase of a home one or two percentage points more expensive (the cost can be pro-rated as part of the monthly payments.)

Homebuyers considering unemployment insurance should read the fine print carefully. Most banks limit the duration of these policies to five years, although there is the possibility of extending them.