What loan insurance to choose?
In a systematic way, banks and credit institutions ask borrowers to take out loan insurance to guarantee credit against default risks and thus agree to grant them credit. If it is not mandatory, this insurance is unavoidable since it is used as a condition of granting a loan. Before the Lagarde law of September 2010, banking institutions imposed their home insurance policy: the group contract.
So, what loan insurance to choose?
You would like to know which loan insurance to choose to guarantee your mortgage in the best conditions. For this you must know its principle, its operation and the possibilities available to you.
Choose your loan insurance
Principle and operation
Loan insurance allows the lending bank to ensure that it will be repaid in the event of death, disability, incapacity for work or loss of employment of the borrower. Following the occurrence of a risk covered by the contract, it assumes full or partial repayment of the loan maturities to the lending institution. It offers real protection to the borrower and his family: in the event of the death of the borrower, his relatives do not inherit the debt because it is fully reimbursed by the insurer and they can keep the financed property.
Group insurance of banks
The type of insurance that banks offer to secure a home loan is a group contract. This is a standard collective guarantee form that the bank has underwritten with an insurance company to insure the loans of its customers. The policy is to spread the risk to an average level for all insureds. The main drawbacks are that it can cost you a lot and that it has many exclusions such as health risks, occupational risks and the risks of sports or leisure. It is not accessible to everyone.
Should he choose the delegation of insurance?
The Lagarde law of September 2010 offers borrowers the possibility of taking out their loan insurance outside the bank, from the insurer of their choice. This is called insurance delegation. Lending organizations are obliged to indicate to their clients that they are entitled to choose their loan insurance contract, by giving them a standardized credit insurance information sheet. This allows them to compare the group contract offered by the lender with individual insurance offers available on the market. The advantage of a delegation of insurance is that the contract is established according to the profile and the situation of the borrower. It is therefore a custom contract whose price can be very attractive if there are no particular risks to cover. It is also an ideal solution for borrowers excluded from group insurance banks.
Important: the bank is obliged to accept a delegation of insurance when the guarantee level of the outsourced contract is equivalent to or higher than the one it has proposed to the borrower.
Compare offers to get the best loan insurance
To find out which loan insurance to choose , you must take the time to make a comparative loan insurance. For this you can use a comparator insurance borrower online or directly contact a loan insurance broker. The objective is to find the contract that will offer suitable guarantees and the lowest rate allowing you to minimize the overall cost of your mortgage.