What is borrower insurance?
The borrower insurance contract is taken out by the borrower with an insurance company, such as MAIF , for example. It guarantees creditors, often banks, the repayment of the outstanding credit in the event of life accidents such as death, disability or even the total and irreversible loss of autonomy of the borrower.
The main guarantees of borrower insurance
- Death: In the event of the death of the borrower, the insurance covers the reimbursement of the remaining capital owed to the bank.
- PTIA: If the borrower becomes unable to work due to illness, disability or a serious accident, the borrower's insurance will take over and reimburse the repayment installments in his place.
- Disability: When the borrower has a level of disability greater than a threshold provided for in the contract (generally 66%), the insurer may be required to cover all or part of the monthly repayments.
- Temporary incapacity for work: If an illness or accident prevents the borrower from working for a specific period, borrower insurance can cover all or part of the monthly payments due during this period.
Is borrower insurance compulsory?
Borrower's insurance is not legally compulsory , but it is required by most lending organizations as a condition for obtaining a property loan. In fact, the bank wishes to protect itself against the risk of non-repayment of the loan in the event of an accident in the borrower's life. It is nevertheless possible to take out this insurance with the insurer of your choice and not opt for that offered by the bank, provided that the guarantees are equivalent.
The borrower insurance delegation
Since the Lagarde law of 2010, borrowers have the right to choose their borrower insurance contract and are no longer forced to accept the one offered by their bank. This provision allows borrowers to compare offers and find the best possible coverage for their real estate project. However, the bank may refuse a delegation of insurance if the guarantees offered by the new contract are not at least equivalent to those of the initial contract.
How to choose your borrower insurance?
To choose the right borrower insurance, it is important to compare the offers based on several criteria:
- The guarantees offered: Check that the contract covers essential risks such as death, disability, PTIA and temporary incapacity for work. Do not hesitate to request personalized quotes to know exactly what is covered.
- Contribution rates: Analyze the total cost of the insurance contract over the entire duration of the property loan and compare it with other offers. Pay attention to the clauses concerning the evolution of monthly payments over time: some contracts may provide for a progressive increase in contributions to follow the evolution of your income, while others will be completely fixed.
- Conditions of acceptance: Borrower insurance contracts may include exclusions or additional premiums depending on your age, your state of health or your professional and sporting activities. Take the time to fully understand these conditions to choose a contract adapted to your personal situation.
Use a broker to find the best borrower insurance
A broker specializing in borrower insurance can help you find the best contract. He knows the market offers, the prices charged and can negotiate with insurance companies to obtain a contract adapted to your profile and your real estate project. This can be an interesting solution to save time and avoid errors.
Can we change borrower insurance?
Yes, it is possible to change borrower insurance during the loan thanks to several legislative measures:
- With the Hamon Law, you can change borrower insurance during the first year of subscribing to the loan without fees or penalties, as long as the new contract offers a level of guarantee equivalent to the previous one.
- Since the Bourquin amendment (2018), it is possible to cancel your borrower insurance annually if the anniversary date of the contract falls after January 1, 2018. Here again, the replacement contract must offer guarantees equivalent to those of the initial contract.
To benefit from these measures, it is necessary to send a registered letter with acknowledgment of receipt to the insurer specifying the desire to terminate the contract. The procedure must be carried out within the time limits provided for by each of the laws mentioned above.
Possible developments in borrower insurance
Over the years, borrower insurance continues to evolve to better meet the needs and constraints of borrowers. Among the changes expected or already underway, we find in particular:
- The extension of the maximum age for subscription and termination of the contract: faced with the aging of the population and the need to borrow later in life, certain insurers have raised the age limits in their contracts.
- Coverage of serious illnesses: several insurance companies have created specific guarantees for people suffering from certain serious pathologies such as cancer, diabetes or multiple sclerosis.
- Insurance for liberal professions: self-employed workers (TNS) often face difficulties in obtaining borrower insurance adapted to their professional situation. Offers are being developed to overcome this problem.
By paying attention to these different aspects, borrowers will be able to better understand borrower insurance and make an informed choice according to their needs and personal profile
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