The borrower insurance is the insurance related to your mortgage. Banks ensure the repayment of your loan by systematically requiring that the borrower subscribes to a mortgage insurance, this insurance has become a mandatory product for banks even if it is not required by law.
This is the principle of the unbundling between the mortgage loan and the insurance borrower introduced by the Lagarde Law of July 1, 2010. You have the legal possibility of taking out loan insurance with the body of your choice, it is possible to subscribe to an insurer outside a bank. I borrow Assures also gives you the option of changing insurance if your loan is outstanding and your insurance is already underwritten.
What is the borrower insurance?
Borrower insurance is a loan insurance that, although legally required, is required by banks because it protects the borrower from the risk of disability or death. It issues an extension: the ADI (Death Insurance Disability), it allows the bank to ensure the payment of the credit in the specific case of a death or a disability that would prevent the borrower to pay his credit of himself. Thus it protects the real estate purchase as well as the patrimony of the borrower.
I borrow I assure, comparator insurance borrower
In order to choose the best loan insurance, it is important to compare the different loan insurance during your real estate purchase project or during the loan you realize. That’s why we advise you to use the insurance comparator of our partner J’empronne J’assure which is completely free, online and without commitment. You get a mortgage insurance rate in minutes and also have the opportunity to subscribe directly.
Who are the people covered by loan insurance?
The insurance of mortgage is compulsory for the most often, and this insurance protects through a multiplicity of guarantees: loss of employment, death, invalidity … 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 duration of the mortgage, if the mortgage ends, then the loan insurance will also end after the full repayment. Insureds are responsible for their loan insurance, they subscribe to it and they pay for it.
Taking out insurance also protects a company that adheres to an insurance contract as well as all partners in the company. However, for the most part, the borrower insurance ensures couples who choose to insure according to a similar or dissimilar mortgage insurance premium rate.
Which bank or borrower benefits the most from the insurance?
The borrower insurance has a specificity, indeed, if it insures the borrowers, the real winners are the banks which benefit from a protection. Depending on the guarantees chosen by the borrowers and in the event of an inability to repay, the bank will obtain repayment of the credit directly. 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 the borrower insurance?
The borrower insurance has many guarantees:
Permanent and Total Invalidity corresponds to the impossibility of exercising a professional activity following an accident or an affection. The IPT is a significant level of disability, this disability is supported 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 disability rate will then be calculated according to the functional disability rate (physical problem, etc.) and the occupational disability rate (inability to practice).
The PTIA guarantee (Total and Irreversible Loss of Autonomy) is linked to the death guarantee. This guarantee corresponds to a physical or mental disability in the event of an accident or illness that affects the insured person preventing him from exercising any professional activity and who has recourse to a third party to perform essential acts of life in this case, the insurance company will reimburse the remaining capital that is due.
The ITT (Total Temporary Incapacity) guarantee corresponds to the period of sick leave which puts the insured person in the temporary situation of incapacity to continue his professional activity. The insurer assumes only the repayment of monthly payments due during the ITT period.
The IPP guarantee (Permanent and Partial Disability) works like the IPT (Permanent and Total Disability), however the support changes at the level of the rate, the insurance borrower begins at 33% instead of 66%, this guarantee brings a better guarantee. The insurer pays a portion of the monthly repayments remaining.
In case of a job loss, the unemployment insurance guarantee ensures the borrower for a period of up to two years, however it is optional.
In the event that the insured is deceased, the sum to be reimbursed will be paid by the borrower insurance to the body that will have granted the loan to the insured. Suicide as well as intense sports, overdose of drugs and other specific cases are excluded from the general conditions. The death guarantee of loan insurance is mandatory for real estate loans.
What guarantees to select for your mortgage insurance?
Depending on how the loan is financed, banks require collateral:
What are the necessary guarantees in the context of a rental investment?
As part 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 in the ability to pay your monthly payments and it takes consequently less risk. It is possible to insure its loan work with these two guarantees.
What are the necessary guarantees for a residential purchase?
Banks want at least a PTIA, IPT, ITT and death guarantee as part of a residential purchase.
What are the different types of borrower insurance and which ones to choose?
When borrowing, it is possible that a request between the bank insurance contract or external insurance is required. If you choose a bank-independent insurer, a borrower insurance delegation will be required. The Lagarde law allows the borrower to find the borrower insurance of his choice. Therefore, what insurance to choose?
For the most part, the borrower does not compare or negotiate with other borrowing insurers and therefore subscribes to a traditional banking contract, the bank therefore provides him with a mortgage loan insurance. From an established average, the rates are established around these insurance borrowers banks, banks take into account if the borrower is a smoker, if he practices an activity or professional at risk …
Beyond banks, there are external credit insurance (MAAF, AXA, April …). These loan insurances are more specific to different borrower profiles and can lower the price of borrower insurance .
A delegation of insurance borrower has many benefits such as the reduction of the contribution, the possibility of changing his contract each year and the permission to add new guarantees to his mortgage insurance.
What are the advantages of a borrower insurance?
Bank loan insurance , referred to as “group insurance”, considered as bank group contracts, and the delegation of insurance to external insurances are opposed. External loan insurance for banks is more individualized and parameterized than a loan insurance with a bank and offers more security. External borrower insurance takes into account several information about the insured. The delegation of insurance to external loan insurances also makes it possible to be assured of specific risks and to save money.
What the law on borrower insurance says
The Lagarde law allows borrowers the freedom to choose the borrower insurance they want from the moment the principle of equivalence of collateral is respected with the banking contract. More and more borrowers are choosing to take out external borrower insurance at 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, notice of two weeks …
Fir Law 2
It will be possible, as of 2018, to change the insurer each year with the new Sapin 2 law. The adoption of the principle of annual cancellation as of January 1, 2018 will allow the borrowers to terminate a borrower insurance contract on the day of the anniversary of the loan to subscribe to another loan insurance and that until the total repayment of the mortgage. Two months’ notice is required, as is the respect of the equivalence of guarantees between the new borrower’s insurance and that proposed by the bank giving the loan.
What insurance for what credit?
The borrower insurance is often mandatory in the context of a work loan, it is also put forward in a consumer credit but it is not mandatory, the choice is free. For a personal loan the borrower insurance gives you security, indeed in a particular case like the work stoppage, the loan is repaid by the insurer. For real estate, home insurance protects the house or apartment while a mortgage insurance protects the person if it is not possible for you to repay the mortgage.