Borrower insurance plays a key role in securing a mortgage by taking care of the repayment of the loan in the event of unexpected events. Here's a detailed look at the main guarantees, exclusions, costs, and specific options.

1. Basic guarantees

• Deaths : Indispensable in any borrower insurance contract, this guarantee ensures the full reimbursement of the capital remaining due to the lender if the borrower dies. This coverage extends over the entire term of the loan.
• Total and Irreversible Loss of Autonomy (PTIA) : If the borrower becomes completely disabled and depends on a third person for the acts of daily life, the insurer reimburses all of the outstanding capital. This guarantee is often combined with the guarantee related to death.
• Permanent Disability (IPT and IPP) :
  • Total Permanent Disability (IPT) : In the event of a disability recognized at 66% or more, making the borrower unable to work, the insurer covers all monthly loan payments.
  • Partial Permanent Disability (IPP) : If the disability rate is between 33% and 66%, insurance may partially cover monthly loan payments.
• Temporary Incapacity for Work (ITT) : This guarantee covers monthly loan payments in the event of a temporary work stoppage due to illness or accident. Treatment starts after a certain deductible period, often between 60 and 90 days.
• Job loss : Although less common and subject to strict conditions (e.g. involuntary unemployment, after a waiting period), this guarantee allows monthly payments to be covered in the event of job loss. Subscription and implementation conditions vary depending on the contract.

2. Specific exclusions and conditions

Exclusions are clauses that limit insurance coverage. They may concern:

• Pre-existing illnesses : Some pathologies declared before subscription will not be covered by insurance.
• Risky activities : Extreme sports, trips to dangerous areas, or certain high-risk jobs can be excluded.
• Risky behaviors : Suicide during the first year of the contract, or injuries resulting from the consumption of illicit substances or alcohol.

The health questionnaire is often required to assess the level of risk presented by the borrower. This questionnaire is less restrictive for loans under 200,000 euros, and if the borrower is under 60 at the end of the repayment, the questionnaire can be completely eliminated, in accordance with the Lemoine law of June 2022.

3. Waiting periods and deductible periods

• Waiting period : Period during which the guarantees of the contract do not yet apply after the signature of the contract. For the job loss guarantee, this period can be up to several months.
• Franchise period : Time elapsed between the occurrence of the incident and the start of insurance coverage. For example, a work stoppage of less than 90 days may not be covered, depending on the terms of the contract.

4. The cost of insurance

The cost of borrower insurance depends on many factors such as age, health condition, loan term, and amount borrowed. This cost is generally expressed in the form of Effective Annual Insurance Rate (TAEA). The TAEA makes it possible to compare different insurance offers taking into account all costs (premiums, application fees, etc.).

Rewards can be:

• Fixes : The premiums remain constant throughout the term of the loan.
• Revisable : Premiums can change, often up, depending on the age of the borrower or other criteria.

5. Additional options and guarantees

Some borrower insurances offer additional guarantees to meet specific needs, such as:

• Occupational disability guarantee : Particularly useful for liberal professions, this option offers adapted coverage in case of incapacity to practice their profession.
• Maternity guarantee : Payment of monthly payments during extended maternity leave.
• Accidental death guarantee : Offers additional coverage in the event of accidental death, sometimes with doubled capital.

6. Possibility to change insurance

Thanks to the Hamon law (2014) and the Bourquin amendment (2018), it is possible to change borrower insurance during the first year of the loan (Hamon law), or every year on the anniversary of the contract (Bourquin amendment). This possibility allows borrowers to take advantage of better offers, both on price and on guarantees.

7. The advantages and disadvantages of group insurance vs. insurance delegation

• Group insurance : Offered by the lending bank, these insurances are standardized and may not be adapted to all profiles. Their main advantage is their simplicity and their automatic integration into the loan.
• Insurance delegation : Allows the borrower to take out insurance external to the lending institution. This option often offers better collateral and potentially lower costs, especially for young, healthy borrowers.

Conclusion

Borrower insurance is an essential tool for securing a mortgage. To make an informed choice, it is crucial to fully understand the various guarantees, exclusions, costs, and options available. By comparing offers and carefully studying the conditions, borrowers can not only effectively protect themselves, but also optimize the total cost of their home loan.

For more information, you can consult the resources available on specialized sites such as ANIL and Cardif.

‍