the risks covered with a home loan

By Julien Trellu September 16, 2022

If you have a mortgage loan project, borrower insurance is not legally compulsory. MBut the bank generally requires the subscription to borrower guarantees.

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.

Death: a compulsory borrower insurance guarantee

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.

Borrower guarantee Total and irreversible loss of autonomy (PTIA)

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 cover (IPT)

Borrower insurance Partial permanent disability (IPP)

Temporary incapacity for work (ITT) guarantee

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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