What is loan insurance?
In all real estate loans systematically include loan insurance or borrower insurance. This is a guarantee that the lending bank requires to ensure that it is reimbursed even in the event of a claim, preventing the borrower from honoring his monthly repayments. Loan insurance acts as protection for borrowers, but also for the financial institution in the event of default on repayment (death, work stoppage, accident, etc.). It is the insurance company with which the borrower has taken out the loan insurance that will ensure the payment of the monthly payments.
The borrower can choose between individual insurance or group insurance for his loan insurance contract. The first, which is optional, is offered by the bank issuing the loan for the purchase of real estate. The insured can indeed go down this path and go through another institution: this is the delegation of insurance. The second, meanwhile, is offered by insurance organizations to better adapt to the profile of the borrower. As for the advantage, young buyers in good health are the most privileged because the price can quickly be half the price.
Change loan insurance at any time
Termination or change of borrower insurance was only possible on the anniversary date of your credit, with two months’ notice. Now that time is over! Indeed, with the Lemoine law, the situation has changed. This was adopted on February 17, 2022 and entered into force on June 1, 2022. This device relaxes all the conditions linked to the change of loan insurance.
Each mortgage that took place after June 1, 2022 allows borrowers to terminate or change their borrower insurance at any time during the life of the contract, as they wish. However, it is imperative that the new contract offers guarantees similar to the one it replaced. Furthermore, it is not necessary to inform your bank of your decision to cancel via a registered letter with acknowledgment of receipt. A simple message, letter or e-mail will do.
As you no longer have to wait for the anniversary date of your contract to make things happen, you can compete. Result: you will make significant savings! Be aware, however, that the cost of insurance is equivalent to 30% of the cost of credit. You must therefore take the trouble to compare all the offers in order to identify the one that best meets your needs and expectations.
An inclusive right to be forgotten
A relaxation of the medical prerequisites for the granting of a loan is part of the progress obtained by the Lemoine law. This new rule is intended to allow patients to have access to mortgages more easily. In the case of cancer, for example, the borrower should not suffer a relapse after ten years from the end of his treatment (5 years if the disease was detected when he was a minor). Since March 2, 2022, this right to be forgotten period has been revised to 5 years for all and is more extensive for hepatitis C.
Exchanges with the signatories of the convention are also provided for by law to extend the right to be forgotten to certain chronic pathologies. Diabetes is one of them. If this negotiation does not provide the expected effects, a decree will emerge with the chronic diseases that will be authorized with the right to be forgotten (before the end of July 2022).
Removal of the health questionnaire
Another visible advance of the Lemoine law is infra-annual termination. Apart from that, she also endorsed the cancellation of the medical health questionnaire. The latter allowed banks and insurance companies to assess the risks incurred by the state of health of borrowers and to set additional premiums accordingly for the majority of mortgages.
The borrower will no longer be obliged to complete the questionnaire on three conditions:
– The credit is less than €200,000 per insured.
– Insurance refers to a real estate loan granted to a user for the financing of a property that will serve as a dwelling or a mixed use (professional and residential).
– The credit end date must occur before the borrower turns 60.
This deletion of the questionnaire was welcomed by various consumer associations. Former penalized patients are good examples. They had to pay heavy surcharges because of their delicate state of health. It has even happened that they have been denied their profile insurance because of their risky profile.
How to use the Lemoine law?
Anyone can use the Lemoine law by comparing the offers of the various dedicated service providers in this area. Free simulations are available online to estimate the cost of insurance corresponding to your profile. For more information, you can contact the organizations so that they can send you detailed and precise quotes on this subject. They tell you about your situation. Thus, you will choose in full knowledge of the facts!
If all these steps seem tedious and rigorous, an insurance broker will take over and take care of it for you. He can cancel your current insurance and take out a new one completely free of charge (because he is paid by the new insurer). Otherwise, brokers specializing in borrower insurance such as Réassurez-moi can also terminate your old contract to avoid administrative procedures. Your lending institution will be informed of your intention, it has ten days to give you its approval.