4 questions you ask yourself about borrower insurance


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In a context of high inflation and while volatile stock markets and bear markets are less attractive, investors may be attracted to real estate, a tangible investment that is reassuring and particularly suited to the current period. Indeed, despite the rise in interest rates, real estate loans still make it possible to benefit from a favorable leverage effect given the high inflation. In addition, real estate tends to appreciate in times of inflation and rental investments remain interesting despite everything since they generally benefit from an indexation (at least partial) of the price of rents on inflation. Do you plan to take advantage of the period to carry out a real estate project on credit and have some questions about borrower insurance? Discover in this article the 4 points to remember about borrower insurance to take out the best one.

Is it mandatory?

First, be aware that borrower insurance is not compulsory. In any case, not in the eyes of the law. In reality, it is very different. You will be hard pressed to find a bank that agrees to grant you credit without adding borrower insurance, insurance that turns out to be a sine qua non for obtaining credit. And even if the bank is already trying to minimize the risk with a careful study of the file (especially in terms of contribution, income, seriousness in keeping the accounts, etc.) as well as the guarantee of the mortgage (mortgage, home loan guarantee, etc.), it has every right to require the subscription of borrower insurance for any acceptance of a home loan.

Read also: How to be sure to buy the house of your dreams?

How much does it cost ?

Borrower insurance can quickly encrypt. Although it often represents less than 0.5% of the capital borrowed, depending on the amount borrowed, the bill can be steep. It is therefore important to seek to compete to obtain the best borrower insurance at the best rate. Remember that online players will post average annual rates around 0.10% when traditional banks will practice more average annual rates around 0.40%.

Be careful all the same, there are strong disparities in rates depending on the situation of the borrower and in particular his age, his state of health and his profession. Thus, studies tend to show that the average borrower insurance rates for bank contracts, for real estate loans over 20 years, are around 0.25% of the capital borrowed for insured persons aged 25, against 0. 45% for insured persons aged 45. The average annual rate offered to an office manager will also be much lower than that offered to a worker handling heavy or dangerous objects, who will himself be offered a rate lower than that of a soldier, for example.

How to choose it?

The first thing to do is to identify your needs. You are not obliged to choose all guarantees and can exclude certain ones. For example, it seems obvious that you are not going to choose the job loss guarantee if you are self-employed or if you are a civil servant. Also think about the distribution between the borrowers if you are borrowing from two. It is not mandatory to be 100% covered for both borrowers. Often, the bank will require at least 100% coverage split between the two borrowers. If your income is very similar, you can choose to be each insured at 50%, for example, or 80%, for example, for the most risk averse. On the other hand, if a person earns three times more than his spouse, it may be interesting that the 100% coverage concerns him and that that of the de facto spouse who contributes less to the repayment of the loan is only 50% or 30% per example.

It will also be necessary to choose the right actor for your borrower insurance, namely a trusted, known and recognized actor (if he were to go bankrupt the consequences could be potentially catastrophic for you).

Finally, you will of course have to choose the serious actor who will offer you the most competitive price with regard to your profile and the guarantees you want.

How to change it?

Do you think you have not taken out the best borrower insurance and want to change? Since the Lemoine law, it is possible, at any time, to change borrower insurance. Please note that there are still some restrictions to be observed. First, you can only change contracts if the guarantees are similar (or more important). It is not possible to reverse your decision and seek to lower the cost of your borrower insurance by taking out a contract with lesser guarantees. Indeed, in this case, the lending institution has the right to refuse your request to change borrower insurance.

Concretely, the insured must send by registered letter to the banking establishment and/or the insurer his request for termination and the new borrower insurance contract chosen with an estimate accompanied by the general conditions of the contract.

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