By Julien Trellu September 16, 2022
Borrower insurance is a guarantee taken out to cover a mortgage. The purpose of this insurance is to guarantee the payment of the installments of the loan if your situation no longer allows you to repay the entire capital remaining due.
A borrower insurance contract contains different cover :
If you want to know the risks covered by borrower insurance and the different levels of coverage, read the rest of this article.
The risk of death is systematically present in a borrower insurance contract
This coverage is activated in the event of the death of the borrower before a certain age limit. This age limit may vary according to the insurers, but it is generally set at 90 years.
Thus, the insurer takes charge of the capital remaining due to the bank, according to the insured amount. The death benefit may contain exclusions (no compensation).
These exclusions can be the following :
- Suicide during the first 12 months of the insurance contract
- Practice of a dangerous sport (air sports, car or motorcycle racing, etc.)
- Driving while intoxicated or under narcotics
According to the borrower insurance contract, the compensation can be active as soon as the contract is signed or after a waiting period. A waiting period is a period between the opening of a right and the payment of the benefits linked to this right.
Total and irreversible loss of autonomy (PITA) coverage covers the risk of total and permanent impossibility to exercise a professional activity. This impossibility must be coupled with the absolute and presumed definitive obligation to have recourse to the help of a person to carry out daily gestures: washing, eating, dressing and moving around.
It is most often conditional on the receipt of an invalidity pension of social security. The insurer takes care of the repayment of the monthly payments of the loan, according to the insured amount (or according to the loss of income).
According to the insurance contract, the risk of total and irreversible loss of autonomy (PITA) is covered for the entire duration of the loan or up to an age limit.
Total Permanent Disability (IPT) is the 2nd category of disability defined by social security. The disability rate is over 66%.
The IPP does not allow the exercise of a professional activity in a permanent and definitive way. This invalidity results from an accident or an illness, and after consolidation of the state of health, that is to say the moment when the injury can be considered as having a permanent character.
Compensation is effective following an assessment of the degree of disability by a doctor appointed by the insurer. This compensation is applied according to the medical scale mentioned in your insurance contract.
Borrower insurance guarantees may differ depending on your contract :
- IPT cover may be valid if you are declared unfit to carry out your professional activity or any professional activity.
- The amount of compensation paid by the insurer depends on your loss of income or the monthly payment of your loan.
- The compensation is paid by the insurer from the 1st day of the IPT or after a deductible period.
- Compensation is excluded or not in the event of illness due to narcotics or alcohol, to the practice of dangerous sports, to voluntary injuries.
Given the characteristics of this guarantee linked to a professional activity, the age limit is generally set at 65 years.
Total permanent disability (IPT) is the 1st category of disability defined by social security. The invalidity rate is between 33% and 66%.
The Partial Permanent Disability (IPP) guarantee corresponds to the permanent incapacity to exercise a professional activity, following an illness or an accident, and after consolidation of the state of health. The medical scale mentioned in your insurance contract sets the amount of compensation.
PPI coverage may differ depending on your insurance contract.
Temporary incapacity for work (ITT) guarantee
The Itemporary incapacity for work (ITT) corresponds to temporary incapacity to exercise your professional activity, following an illness or an accident which gives rise to a work stoppage. The incapacity must be total.
Depending on your insurance contract, this coverage may be defined by the inability to perform your professional activity at the time of the accident or illness or any professional activity.
Your insurer covers the repayment of monthly loan payments under the conditions specified in your contract : according to the loss of income or according to the insured amount.
If you resume your professional activity (even part-time), the coverage of the insurance stops. Your insurance contract may nevertheless contain a clause allowing coverage in the event of the resumption of your activity with a therapeutic half-time.
Your insurance contract may provide for a deductible, a period during which your insurer does not cover the payment of compensation. Exclusions may also be mentioned (practice of dangerous sport, voluntary injury, illness or accident due to alcohol or narcotics).
If you wish, discover how to get borrower insurance when you have health problems.
Job loss: optional coverage
Job loss borrower insurance is optional. In the event of job loss, your insurance covers all or part (depending on your contract) of the payment of your monthly loan payments. This support is provided under conditions.
The rules for compensation in the event of loss of employment are specified in the general conditions of your contract. It is advisable to study them well, because the guarantees insurance borrower loss of employment can differ according to the insurers.
Find below the conditions generally present in job loss cover :
- It concerns employees.
- It cannot be taken out if you are on a trial period or on notice of dismissal.
- It is activated during economic redundancy: resignation, conventional termination or dismissal are excluded.
- The insurance covers all of the monthly payment of your loan or part of it (difference between the amount of your monthly payment and the amount of your unemployment benefit).
- A maximum monthly indemnity is specified in your contract.
- A maximum duration of compensation is fixed (a number of months of compensation).
- The number of benefit periods for this warranty is limited.
Your contract may also provide :
- A waiting period: the job loss guarantee is active a few months after your subscription to the contract.
- A grace period: it is not triggered directly after your job loss.
To justify the activation, you must send documents to your insurer, including :
- Your employment contract
- The dismissal letter
- Your job center certificate
If the job loss guarantee is active, you must of course inform your insurer in the event of resuming a professional activity.
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A graduate in economics-management and sports management, I have worked in the territorial public service since 2009 and I joined Aide-Sociale.fr in 2017. I strive to bring my experience of administration through the articles and guides that I always write with a view to the common good.