Borrower insurance: understand everything to choose it well


Article sponsored by Cardif

If it is now possible to borrow at very low interest rates to finance a real estate acquisition, borrower insurance represents a significant part of your monthly payments: it even happens that its cost is higher than the interest of the loan and represents more than half of the total cost of credit! In the event of death, disability, incapacity for work or even loss of employment, the monthly loan payments or the capital remaining due is reimbursed to the credit institution by the borrower insurance. Its subscription may be subject to medical formalities, which can range, depending on your age, your profession, the amount to be insured… from a simple medical questionnaire to more advanced medical examinations.

Take out insurance in the event of an aggravated health risk

People with an aggravated health risk, who cannot benefit from the standard conditions, can claim the provisions of the AERAS Convention (Insuring and Borrowing with an aggravated health risk). This provides for several levels of analysis of the insurance application and applies as soon as the health form indicates an aggravated risk, but does not guarantee that it will be obtained. In the event of refusal, the borrower can turn to alternative solutions such as: the mortgage, the guarantee or even the pledge.

The Lagarde law, to freely choose your loan insurance

Since 2010, thanks to the Lagarde law, the borrower has been free to choose loan insurance other than that offered by the lending institution. We then speak of delegated insurance, as offered by Cardif. Whether for its cost or its guarantees, it is important to think about it from the start of your real estate project, whatever its nature (purchase of a main or secondary residence or rental investment) because the delegation of insurance can allow you to save money with an equivalent level of guarantee.

The Lemoine law to change loan insurance at any time

The Lemoine law of February 28, 2022 allows you to change loan insurance at any time during the contract. No notice period or formalism is required. The only condition: that the level of guarantee between the two contracts be at least equivalent.

Termination at any time and by any means comes into force on June 1, 2022 for new contracts and on September 1, 2022 for loan insurance contracts taken out before June 1, 2022

Different levels of guarantee depending on your real estate project

Borrower insurance offers at least a guarantee in the event of Death (DC) or in the event of Total and Irreversible Loss of Autonomy (PTIA), often recommended for a rental investment. It protects any surviving co-borrower or any heirs, by sparing them the burden of repaying the outstanding capital on their own.

On the other hand, in the context of the purchase of your main residence, more complete coverage is necessary: ​​the insurance must cover the impossibility of exercising one’s professional activity due to disability, this is the purpose of the guarantees. IPP (Permanent Partial Disability), IPT (Permanent Total Disability), and ITT (Temporary Total Incapacity for Work). Optional, the job loss guarantee covers you, under certain conditions, if you lose your job.

The quota, a determining element of your borrower insurance

The quota defines the part of the capital covered by the insured in the event of a claim. If you borrow alone, the quota is necessarily equal to 100% of the amount due. If you borrow with two, the quota can extend from 100 to 200% of the capital. In this case, several configurations are possible at the time of subscription: 100% coverage for each co-borrower (i.e. an overall quota of 200%) or a 50/50% or 70%/30% distribution… In the event of a claim concerning only one of the co-borrowers, the insurance reimburses the amount of capital remaining due or the part of the monthly payment corresponding to its share. A Cardif expert can help you define the quota and find the solution best suited to your situation.

How to go about it in the event of a disaster?

Death, accident or illness resulting in disability or inability to work, loss of employment: in all these situations, you must contact the service in charge of claims management under your contract and within the time limits provided for in the contract.

Once the declaration has been made, the insurer will send you a file which must be completed by attaching certain supporting documents (depending on the guarantee concerned). These are included in the notice of your contract. These are generally the following documents: copy of your loan contract and its payment schedule, copy of the death certificate of the borrower accompanied by a medical certificate indicating the cause, if applicable, certificate from Social Security proving permanent and irreversible disability or proof of payment of daily allowances or a disability pension. In the case of job loss, a copy of the employment contract, the letter of dismissal and a certificate of registration with Pôle Emploi must be attached to the file.

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