Borrower insurance is insurance linked to your mortgage. Banks ensure the repayment of your loan by systematically requiring that the borrower take out mortgage insurance, this insurance has become a mandatory product for banks even if it is not mandatory by law.
This is the principle of the unbinding between the mortgage loan and the borrower insurance introduced by the Lagarde Law of July 1, 2010. You have the legal possibility to take out loan insurance with the organization of your choice, it is possible subscribe to it with an insurer outside a bank. I Borrow I also give you the possibility to change insurance if your loan is in progress and your insurance is already taken out.
What is borrower insurance?
The loan insurance is a loan insurance, although it is not mandatory in law, it is required by banks because this insurance protects the borrower to the risk of disability or death. It issues an extension: the ADI (Death and Disability Insurance), it allows the bank to ensure the payment of the loan in the specific case of death or disability which would prevent the borrower from paying his loan. himself. Thus it protects the real estate purchase as well as the borrower's heritage.
I borrow I insure, borrower insurance comparator
In order to choose the best borrower insurance, it is important to compare the different loan insurance during your real estate purchase project or during the loan you make. This is why we advise you to use the insurance comparator of our partner J'emprunte J'assure which is completely free, online and without obligation. You get a mortgage insurance rate in a few minutes and also have the option to subscribe directly.
Who are the people covered by loan insurance?
Mortgage insurance is compulsory for the most part, and this insurance protects through a multiplicity of guarantees: loss of employment, death, disability ... all these guarantees are specified in the general conditions of the insurance contract of loan taken out by the insured. Abroad, the only factors taken into account in loan insurance are disability and death.
The payment period depends on the term of the mortgage, if the mortgage ends then the loan insurance will also end after full repayment. Policyholders are responsible for their loan insurance, they buy it and pay for it.
Taking out insurance also helps protect a company that takes out an insurance contract as well as all the partners of the company. However, most often, borrower insurance insures couples who choose to insure according to a similar or dissimilar mortgage insurance portion.
Who among the banks or the borrower benefits the most from insurance?
Borrower insurance has a specificity, in fact, if it insures borrowers, the real winners are the banks which benefit from protection. According to the guarantees chosen by the borrowers and in the event of an inability to repay, the bank will obtain the repayment of the credit directly. The banks are part of this contract and they are the ones who benefit the most from this loan insurance.
What are the different guarantees of borrower insurance?
Lender insurance has many guarantees:
Permanent and Total Disability corresponds to the inability to exercise a professional activity following an accident or illness. The IPT is an important level of disability, this disability is taken care of after the analysis of the state of health of the insured if his disability is greater than 66% of the disability rate for the IPT guarantee.
To obtain the IPT guarantee, the degree of disability will then be calculated according to the rate of functional disability (physical problem, etc.) and the rate of professional disability (inability to exercise one's profession).
The PTIA guarantee (Total and Irreversible Loss of Autonomy) is linked to the death guarantee. This cover corresponds to a physical or mental disability in the event of an accident or illness which affects the insured preventing him from exercising any professional activity and who has recourse to a third person to perform essential acts of life. , in this case, the insurance company will reimburse the remaining capital that is due.
The ITT cover (Total Temporary Incapacity for Work) corresponds to the period of sick leave which places the insured in the temporary situation of incapacity to continue his professional activity. The insurer only takes care of the reimbursement of monthly payments due during the ITT period.
The IPP (Permanent and Partial Disability) guarantee works like the IPT (Permanent and Total Disability), however the coverage changes at the rate level, the borrower insurance starts at 33% instead of 66%, this guarantee provides a better guarantee. The insurer covers part of the monthly repayment installments.
In the event of job loss, the unemployment insurance guarantee insures the borrower for a maximum period of two years, but it is optional.
In the event that the insured is deceased, the amount to be reimbursed will be paid by the borrower insurance to the organization which granted the loan to the insured. Suicide as well as intense sports, drug overdose and other specific cases are excluded from the general conditions. The death guarantee of loan insurance is mandatory for home loans.
What guarantees to choose for your mortgage insurance?
Depending on how the loan will be financed, banks require to take collateral:
What guarantees are necessary in the context of a rental investment?
In the context of a loan for a rental investment, the PTIA guarantee and the Death guarantee of the borrower insurance will be requested by the bank. The bank will therefore feel protected because you are able to pay your monthly payments and consequently take less risk. It is possible to insure your work loan with these two guarantees.
What guarantees are necessary for a residential purchase?
Banks want a minimum PTIA, IPT, ITT and death guarantee for a home purchase.
What are the different types of borrower insurance and which ones to choose?
When borrowing, you may be asked for a request between the bank insurance contract or external insurance. If you choose an insurer independent of the banks, a borrower insurance delegation will be requested. The Lagarde law allows the borrower to find the borrower insurance of his choice. Therefore, which insurance to choose?
Most often, the borrower does not compare or negotiate with other borrower insurance organizations and therefore subscribes to a traditional banking contract, the bank therefore provides him with mortgage insurance. From an established average, the prices are established around these bank borrower insurance, the banks take into account whether the borrower is a smoker, if he practices a risky activity or professional ...
Beyond banks, there are external credit insurance companies (MAAF, AXA, April…). These loan insurances are more specific to different borrower profiles and can lower the price of borrower insurance .
A borrower insurance delegation has many advantages such as lower premiums, the possibility of changing your contract each year and the permission to add new guarantees to your mortgage insurance.
What are the advantages of borrower insurance?
Bank loan insurance , which is called "group insurance", considered as group contracts of banks, and the delegation of insurance to external insurance companies are opposed. Loan insurance outside banks is more individualized and parameterized than loan insurance with a bank and offers more security. External borrower insurance takes into account several information on the insured. The delegation of insurance to external loan insurance also makes it possible to be insured on specific risks and to save money.
What the loan insurance law says
The Lagarde law allows borrowers the freedom to choose the borrower insurance they want as soon as the principle of equivalence of guarantees is respected with the banking contract. More and more borrowers are choosing to take out borrower insurance from outside their bank.
The Hamon law authorizes the change of loan insurance after all loans after July 26, 2014. However, this change of external borrower insurance is subject to certain conditions: equivalent contract, change within 12 months, two weeks notice, etc.
Sapin 2 Law
It will be possible, from 2018, to change insurer each year with the new Sapin 2 law. The adoption of the principle of annual termination from January 1, 2018 will allow borrowers to terminate a borrower insurance contract on the day of the loan . anniversary of the loan to subscribe to another loan insurance and this until the total repayment of the mortgage. Two months' notice is required, as well as respect for the equivalence of guarantees between the new borrower insurance and that offered by the bank giving the loan.
What insurance for what credit?
Borrower insurance is often compulsory in the context of a work loan, it is also highlighted in a consumer loan but it is not compulsory, the choice is free. For a personal loan borrower insurance gives you security, in fact in a particular case such as the work stoppage, the loan is reimbursed by the insurer. For real estate, home insurance protects the house or apartment while mortgage insurance protects the person if it is not possible for you to repay the mortgage.
Note that the Housing Credit guarantee does not replace loan insurance which is taken out separately.