To borrow, it is very often necessary to bring a loan insurance guarantee in order to protect yourself and assure the lender that it will be reimbursed. To grant a mortgage, even if the subscription of a loan insurance is not legally compulsory, the banks and the credit organizations indeed require its subscription.
Guarantee your credit with borrower insurance
Borrower insurance, also called credit insurance, loan insurance or borrower guarantee, covers all or part of the repayment of a loan in the event of difficulties encountered by the borrower to honor its payments following the occurrence of a risk covered by the contract: death, disability, incapacity for work or unemployment. Any loan insurance guarantee involves the payment of a premium added to the monthly payment of the credit.
Two types of loan insurance
There are two types of guaranteed loan insurance contracts:
- Group insurance
- Individual insurance
Group insurance: a contract offered by banks
This insurance is a collective (risk pooling) and standard contract that has been previously taken out by the banking establishment with an insurer in order to offer it as loan cover to its customers. To benefit from this loan insurance guarantee, it is necessary to enter an average of borrowers and therefore to correspond to the conditions of the contract. In the event of a high or specific risk, the bank may refuse to grant you its “house insurance”.
Individual insurance: a contract external to the lender
You can take out insurance other than that of the bank, by choosing your insurer. This is called delegation of insurance. In this case it is an individual insurance. This type of insurance has the advantage of being established according to the profile and the situation of the borrower. It is therefore suitable both in terms of price and guarantees. If you are young and you do not present any particular risk, you can make significant savings on your credit by opting for this type of contract. And in case of refusal to grant group insurance by the bank, the delegation of insurance is a very good alternative to guarantee your loan and therefore release the funds.
You can choose your credit insurance
Finally, since November 8, 2016, you have the option of terminating your loan insurance contract each year, on its anniversary date, to replace it with another that you have taken care to find with the competition in order to benefit from ” a lower rate or to set up more extensive guarantees to be better covered, and in a more suitable way, depending on your borrower profile.
To choose your loan insurance correctly, use an insurance comparator, carry out an online simulation and / or contact a broker specialized in insurance directly.
What type of loan insurance guarantee can we take out?