L’borrower insurance it is a guarantee required by the banks at the time of the loan request. While not a legal requirement, it is almost always required. This insurance covers the risk of non-payment linked to the risk of incapacity, invalidity or even loss of employment. Here’s how to save on this insurance when taking out your mortgage.
Negotiate a lower insurance rate with your bank
You can play the competition between the different insurance companies when you take out a home loan. For starters, you can perfectly argue with your banker get your borrower insurance cheaper as much as possible. Banks generally offer group contracts that bundle the risks of borrowers. These contracts are not necessarily tailored to your profile. This means that you could get a more or less favorable rate with another one insurance company. This is where you can trade with your bank. This can sometimes benefit loyal customers by accepting a lower rate.
You can also play on the borrowers’ coverage rate. Loan insurance does not have to include all collateral. Except for the death benefit And PTIA (Total and Irreversible Loss of Autonomy) which are mandatory, the guarantees are subscribed on the basis of the borrower’s profile. If you take out both a loan and a borrower insurance, you can also modulate the odds to get to 100%, but with the distribution you prefer. Each can be covered at 50%, but one can be covered at 60% and the other at 40%, or one at 70% and the other at 30%.
Take advantage of the borrower’s insurance proxy
By default, your bank will offer to take out insurance for its institution. But you are free to take out an insurance contract in another establishment after comparing the most attractive offers. This is called the insurance delegation.
When you set up the mortgage file with your bank, thanks to the Lagarde law, you can compare the credit insurance in the market and ask your bank to take out this insurance. You will thus be able to choose an insurance contract suited to your profile and your needs, with a preferential rate. If you do a insurance delegation, the bank where a loan is requested does not have the right to change the terms of the credit. The only condition is that the new insurance offers at least the same guarantees offered by your bank for the duration of the loan. If this condition is met, the delegation cannot be refused.
If you haven’t been able to compete to save on your credit insurance, you have the option to do so after signing the loan. With the Hamon’s law, you can withdraw from the home loan insurance contract at any time during the first 12 months of signing the loan offer. This law aims, like the Lagarde lawto promote competition in the field ofborrower’s insurance and therefore pay less monthly installments.
What guarantees must be included in the insurance contract?
If you want to changeborrower insurance, it is necessary to identify the guarantees offered by the insurance of the bank from which the loan is taken. This will allow you to verify that you find them in the contracts offered by competitors.
Death and PTIA warranties must be included in any contractborrower insurance. They respectively include the repayment of the residual sums due in the event of the death of the borrower and the payment of the installments in the event of the latter’s impediment to exercising his professional activity. The ITT (Temporary Interruption of Work) guarantee and the IPT (Total Permanent Disability) and IPP (Partial Permanent Disability) clauses are optional. The ITT warranty intervenes in the event of an interruption of the work. Pay attention to the minimum time required for work stoppage or disability before insurance intervention. Depending on the contracts, they can be from 3 to 6 months. The ITT guarantee induces coverage of debts in the event of a disability assessed above 66% and the IPT guarantee induces coverage in the event of disability estimated at 33%.
Also check the terms and conditions of yours guarantee of the borrower. It is necessary to know how to distinguish between the different reimbursements. In the event of reimbursement of the indemnity, the amount owed by the insurance in the event of a claim is paid to you directly, while in the event of a lump sum compensation, the insurer will pay you the amount corresponding to the actual loss of income. the amount indicated in the contract. Don’t forget to check the exclusion clauses, specifying the situations not supported by the insurance. They typically include high-risk illnesses such as mental disorders and back pain. These clauses can also set age limits. The age limit is generally between 80 and 85 years for the death guarantee, and between 65 and 70 years for the other coverages.
Renegotiate home loan insurance every year
The Sapin Law 2also called Borchino Amendment, allows borrowers to withdraw from the insurance contract after 12 months from the date of signing the loan agreement. You can then renegotiate your insurance or change the loan insurance every year on the anniversary date. The expiration date is set on the day the loan offer is signed and will remain on that date even if you change insurance in the meantime. This allows you to regularly check the rates charged in the credit insurance market and see if you are still covered by the one that’s right for you. If you feel your insurance rate is too high, take advantage of this deadline to look for more attractive rates or take the time to discuss it with your insurer to get a lower rate.
Do not hesitate to ask for as many quotes as possible from different companies to encourage competition. Always compare offers with at least an equivalent level of guarantees, to make sure you choose the most attractive. It is also possible to negotiate with some businesses by asking them to match the cheapest offer you have found.