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Financing your construction: Choosing borrower insurance

Securing your bank loan for building your house must be studied

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Did you know that borrower insurance can be freely chosen? This coverage guarantees the loan repayment in the event of incapacity, disability or death. Your bank is therefore not necessarily the most economical solution. Play the competition, because this insurance still represents a significant part of your home loan.

What is borrower insurance?

This provident insurance is taken at the same time as the Bank loan. It offers guarantees against risks related to death, to total and irreversible loss of autonomy, to total or partial permanent disability, to total or partial temporary incapacity for work and to Job Loss. Secure a home loan aims to protect the family by repaying the loan in full or taking over the monthly loan payments.
Highly recommended, it is not obligatory, but it may be required by certain banking establishments.

Why is borrower insurance essential?

Borrower insurance is required by the majority of banks to grant a mortgage loan. It protects both the borrower and the banking institution. In the event of a disaster (illness, accident, loss of employment), the insurance covers all or part of the monthly payments or the capital remaining due.

To go further, read the article “  4 tips for getting a good mortgage »

In which cases does borrower insurance reimburse the bank loan?

Borrower insurance covers death or loss of autonomy 

This guarantee covers the total or partial reimbursement of the capital remaining due to the lending institution, depending on the portion of the loan covered. heirs, or the person with a Total and Irreversible Loss of Autonomy, PTIA then no longer has to repay the bank loan.

Total Temporary Incapacity to Work (ITT)

In the event of temporary work stoppage, the insurer reimburses the monthly payments in place of the borrower to the lending institution.

Total Permanent Disability (TPD)

The insurance covers the reimbursement of monthly payments to the lending institution, depending on the portion of the loan covered if, following an illness or a covered accident, the insured person finds himself totally and permanently unable to exercise his profession, with a disability rate defined in the contract.

Permanent Partial Disability (PPD)


The insurance covers the partial reimbursement of monthly payments to the lending institution, depending on the portion of the loan covered if, following an illness or a covered accident, the insured party finds themselves permanently unable to exercise all or part of their profession, with a disability rate defined in the contract.

Covering job loss

There is nothing more frightening than the fear of losing your home if you lose your job. However, it is possible to cover this risk with borrower insurance. This optional guarantee covers monthly payments in the event of redundancy.

It is possible to choose your borrower insurance.
Banks often impose borrower insurance on bank loans, but this can be freely chosen.

Can we take out insurance outside the bank?

The Lagarde law of 2010 requires banks to accept any external insurance offering a level of guarantee comparable to that which it itself offers. Thus, any person who takes out a loan can freely choose from the offers on the market. The key is significant savings over the entire duration of the loan. Taking out external insurance can save you up to 50% on the total cost of your borrower insurance.

 

Compare borrower insurance offers

Since the adoption of the Lagarde, Hamon and Lemoine laws, it is possible to freely choose your borrower insurance, including outside that offered by the bank.

Several criteria can be compared:
Guarantees included,
The total cost of insurance,
Exclusions of warranties,
Optional options.

Online insurance comparison sites, such as the consumer association Que Choisir will allow you to familiarize yourself with this market, and to obtain an overview of the offers proposed today.

Negotiate the terms of borrower insurance with your bank

If you opt for theborrower insurance offered by the bank, do not hesitate to negotiate. Depending on your profile, the bank may offer price adjustments or additional guarantees.

Mistakes to avoid when choosing your borrower insurance

Rushing to take advantage of the bank's offer: Although practical, it is not always the most economical or suitable.

Overlooking exclusions: Some offers exclude specific pathologies or situations.

Forgetting to compare overall costs: The annual percentage rate of insurance (APR) allows you to measure the real cost of insurance over the entire term of the loan.

Ignoring the possibility of canceling: Since the Lemoine Law, you can change your insurance at any time, but it is essential to follow the procedures to avoid an interruption of coverage.

Read all of the general conditions carefully, and make sure you understand the warranty exclusions, waiting periods, and excesses applied in the event of a claim.

The cost of borrower insurance varies depending on age.
Do not hesitate to compare all the borrower insurance offers, because the costs and guarantees vary greatly.

Age and state of health, what influence on borrower insurance?

An elderly or sick person having a higher probability of having problems during the term of the loan, the insurer, the insurer modifies its contract according to the personal situation of its customers. Indeed, the risk assumed by the insurer can vary considerably according to your age at time of borrowing. This criterion thus directly influences the cost of borrower insurance, but also the guarantees offered. Similarly, medical background may result in exclusions or additional premiums.

To better understand the subject of bank loans, read the article “  Home loan: how to be sure you have the right borrower profile? ».

Changing insurance during the contract

Other laws have come to extend the rights of borrowers. The Hamon and Bourquin laws allow policyholders to put their insurance policy into competition throughout the life of the contract. It is therefore possible to change insurance at any time during the first year of the contract and then each year on its anniversary date. The opportunity to benefit from more advantageous conditions by playing the competition.

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