When you take out a mortgage, for example, the lender may require bank loan insurance. If you keep the freedom to choose the one you like, ask carefully beforehand!
If you have already simulated a bank loan, you have probably noticed the mention APR (annual effective annual rate), indicated right next to your rate. This indicates that the rate is inclusive of all costs, including borrower insurance.
Borrower insurance: what does it cover?
Borrower insurance includes 3 guarantees:
- The death guarantee. In the event of the death of the insured, the insurance takes over to reimburse the remaining capital due on the day of death.
- The invalidity guarantee. It is granted as an extension of the death guarantee and may report to functional disability, inability to exercise a professional activity or the total and irreversible loss of autonomy.
- The job loss guarantee. It can cover the risk of dismissal in the case of a mortgage.
If you borrow with two, you can choose the distribution: 100% on two heads or 80% or even 50% each. It’s up to you to play the parameters according to your need for security and your financial resources.
Change insurance more easily
A credit institution may require you to take out borrower insurance. However, you are not required to accept their insurance offer and can freely choose the establishment that will insure your home loan.
Even if you accept your banker’s proposal, there is always time to change your mind, thanks to the provisions of the Consumer Law, known as the Hamon Law:
- You can cancel your bank loan insurance within 12 months of signing your contract, provided that the new contract includes guarantees equivalent to the previous one.
- After the first year, you can change your insurer every year if you wish. To do this, simply send a registered letter to your insurer at least 2 months before the due date.
Comparison is not always right
Read your insurance proposal carefully before accepting it. The amount of the insurance premium should not be your only indicator. Your choice must also report to:
- The exclusion clauses of certain contracts. Depending on whether you are a smoker or not, whether or not you have health problems, you will not always be covered in the same way.
- The level of coverage. The insurance company can choose to take over 30%, 50% or 100% of your due date (in the event of work stoppage) or of the outstanding capital (in the event of death). Check this point carefully to avoid cutting your savings in the event that the insurance does not cover the full cost of the credit.
- The cost of the options taken out under an insurance delegation is aligned with the level of guarantee offered by the lender’s contract.
- Any waiting periods or deductible, during which the insurance will not intervene.
Lite Lending borrower insurance supports the real estate credit offer launched by Lite Lending. With its three levels of insurance – Security, Comfort and Senior – it adapts to all situations and protects you effectively.