Loan insurance: what are the essential guarantees?

Loan insurance is as important as the mortgage to which it is attached. Among all the guarantees offered, some are essential and others optional.

Death and disability insurance, the minimum required

Death and disability insurance, the minimum required

Loan insurance is not compulsory to obtain a mortgage. But in reality, the banks strongly demand it. Because if mortgage guarantee or surety can cover the financing transaction, it is necessary to cover the borrower as a person. The lending institution thus ensures that the capital is recovered in the event of the borrower’s death.

For the borrower, such coverage is not free. To qualify for loan insurance, individuals must pay a monthly fee, the amount of which depends on the rate of insurance. This rate will vary according to the age of the borrower, his state of health and the capital borrowed and the guarantees subscribed. The total amount of insurance can thus reach more than 30% of the total financing transaction.

In terms of guarantees, some are essential and others are optional. Death insurance and disability insurance are the minimum required to take out a mortgage. In the sector, these insurances are better known as death and disability insurance. However, it is important to peel the lines of such a contract because not all deaths are taken into account. For example, an accident during a risky sport (parachute, motocross) can be excluded from the contract.

How to find the guarantees for your borrower profile

How to find the guarantees for your borrower profile

For disability, it is measured as a percentage. An accident which would cause a “slight” disability could therefore be excluded from the coverages. A guarantee with better protection will inevitably have an impact on the budget. There are other guarantees such as job loss insurance, but the latter is not fully recommended. The conditions for its implementation are sometimes very complicated to implement.

In order to find an insurance contract that best fits their profile, Internet users have access to comparators like LeLynx.fr. These online tools will identify the different offers existing on the market. By going through a broker, it is also possible to have access to the offers of alternative insurers. In fact, with the opening up of the borrower insurance market to competition, customers can choose a delegation of insurance instead of group insurance (that of the bank).

With a delegation, it is possible to considerably reduce the amount of mortgage loan insurance because their price varies from simple to double.