when is it worth changing borrower insurance?


Borrower insurance, also called loan insurance, makes it possible to secure the repayment of the mortgage to the bank in the event of the death, disability or incapacity of the borrower. Changing contracts at any time and free of charge is now a reality since the promulgation of the Lemoine law.

Previously, this was only possible within 12 months of signing the loan (Hamon law) or on the anniversary date of the contract (Bourquin law). The objective of this liberalization of borrower insurance: to allow consumers to save money on their credit by playing on the competition and taking out a cheaper insurance contract. The financial gain will be more or less important depending on the situation.

Cancellation at any time and at no cost to the borrower

The competition for borrower insurance ended this year with the passing of the Lemoine law. Terminating your contract at any time has been possible since 1er June for all new loan insurance contracts taken out from this date and since 1er July for insurance contracts already in progress.

In addition, the borrower had to respect a notice so as not to be refused by the bank. From now on, the latter must terminate his client’s contract within the month following the sending of his letter of termination (by registered letter). And they only have 10 days left to respond to the request, either validate it or refuse it.

A level of transparency has also been added by law: the bank must inform the borrower every year of his right to change insurance at any time.

Namely, the new contract must present guarantees equivalent to the previous contract (the same risks covered) to be accepted by the bank.

A gain of €15,000 on average over the duration of the loan

“The challenge of the Lemoine law is major for the consumer, because 85% of loan insurance is taken out with banks by borrowers”, explains Sébastien Limousin, distribution and digital director of the April group, wholesale insurance broker. Indeed, it is often necessary to take out the bank’s group insurance to receive a loan offer. “And these banks earn an average of 70% on loan insurance,” he adds. Given the economic news, subjects related to purchasing power will be increasingly important in the months to come. »

On average, according to figures from UFC-Que Choisir magazine, by moving from a group contract to an insurance delegation (an individual contract taken out with another insurer), the average saving for a borrower is 15 000 € over the duration of his loan.

“Thus, he will divide his cost of insurance by two on average, or even by three depending on the situation, for equivalent guarantees,” he says.

More savings if you’re in the first half of your credit

If you have chosen to pay your borrower insurance contributions on the amount of borrowed capital remaining due, you will pay a more expensive insurance premium at the start of the loan and less expensive thereafter, the borrower insurance being linked in this case what you still have to repay.

“Thus, if you are in the second part of your loan repayment with increasingly weak loan insurance, the expected savings will be less compared to a borrower in the first two or three years of his credit” , remarks Sébastien Limousin of April.

In short, the closer you are to the start of your loan, the more financial interest you have in taking out individual borrower insurance.

The higher the amount borrowed, the greater the gains

The savings made by changing borrower insurance are also linked to the amount borrowed.

“At an equivalent age and health situation, the savings will not be the same between a loan of €200,000 and another of €500,000, underlines Sébastien Limousin. By switching loan insurance, some of our clients have saved up to €70,000 on very large amounts borrowed, around €2 million. »



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The younger the borrower, the more interesting it is to change

The age of the borrower is also a criterion to be taken into account. “Changing borrower insurance is always profitable, but the savings will not be the same if you are a young couple in good health or an older person with a health problem, notes Sébastien Limousin. In addition, in group contracts, the risks are pooled, so young borrowers pay more insurance than they should. Thus, an individual contract will be more interesting for them. »

Are you cured of cancer? Is it worth it !

The Lemoine law strengthens the right to be forgotten for victims of certain serious pathologies. A borrower no longer has to declare cancer or hepatitis C that occurred after the age of 21 to his borrower’s insurance if the therapeutic protocol was completed at least 5 years ago, instead of 10 years previously.

Thus, if you have been cured of cancer for 5 years, changing borrower insurance will save you money since you will no longer pay the additional premium linked to your former illness.

Have you taken up an extreme sport? A change to consider…

Have you discovered a passion for paragliding? Some insurance companies may refuse to insure you or may apply additional premiums to cover the risk.

“It is better to consult a broker to calculate whether it is really worth changing the insurance contract,” advises Sébastien Limousin of the April group.

In all cases, whether you cancel your insurance or not, you must declare any change in your personal or professional situation to your insurer, otherwise you will not be compensated in the event of a problem…

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