The conditions for taking out job loss insurance are very restrictive. Photo credit: Getty Images
When taking out a home loan, the borrower’s insurance includes a guaranteed option for job loss. It serves to protect the buyer in the event of dismissal. Conditions for obtaining and taking over, waiting periods, grace period, ceilings, declarations of professional changes… It is important to understand how it works and the conditions for using non-life insurance, also known as unemployment insurance.
Summary:
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Summary
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Job loss insurance: an option as part of borrower insurance
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What are the conditions for taking out unemployment insurance?
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Compensation in the event of job loss: be aware of waiting periods and deductibles
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What is the compensation for a job loss guarantee?
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Job loss guarantee: what is the duration of the compensation?
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Job loss insurance: Play the competition and negotiate the price
Summary
Job loss insurance: an option as part of borrower insurance
What are the conditions for taking out unemployment insurance?
Compensation in the event of job loss: be aware of waiting periods and deductibles
What is the compensation for a job loss guarantee?
Job loss guarantee: what is the duration of the compensation?
Job loss insurance: Play the competition and negotiate the price
Job loss insurance: an option as part of borrower insurance
When you take out a home loan, you can choose loss coverage as part of your
borrower’s insurance. Job loss insurance, also called unemployment insurance, allows your insurance company to pay all or part of the monthly installments on your mortgage in the event of termination. Originating in the 1980s with the rise in unemployment in France, this option is optional in borrower insurance contracts.
Job loss insurance can be taken out for all types of housing loans, including for a zero-interest loan (PTZ) or a loan with a variable interest rate. Job loss insurance agreements provide a short subscription of between 1 and 4 years. However, the warranty can be extended, usually tacitly.
A social insurance guarantee to study well in advance of enrolment
When you take out a home loan from a bank, you often have to take out borrower’s insurance. This guarantee covers, as a minimum, the risk of death, disability and incapacity. For your borrower’s insurance, job loss coverage is optional. It has its own general conditions that define the rules for compensation. It is important to study these conditions carefully and to compare the different job loss insurance contracts.
What are the conditions for taking out unemployment insurance?
The conditions for creating loss insurance are restrictive. In fact, they vary from one insurance company to another. To qualify, the borrower must often meet certain conditions:
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Be employed on a permanent contract (CDI).
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Have between 6 and 12 months of seniority with the same employer, depending on the insurance companies.
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Be entitled to unemployment benefit from the unemployment fund.
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Be under 50 years of age. Insurance companies often refuse job loss cover beyond this age given the employment rate for this age group in France.
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Signs, in addition to job loss insurance, a
death insurance in case of disability.
Therefore, it is difficult to get job loss insurance as part of a home loan if the buyer:
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is on probation, notice of dismissal or early retirement;
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resigned voluntarily;
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is on partial unemployment;
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is on a fixed-term contract;
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dismissed without being entitled to unemployment benefits.
Termination of contract and dismissal due to gross negligence are not covered by loss insurance.
To note
Self-employed, liberal professions, tradesmen, farmers and traders are generally not entitled to job loss cover under borrower’s insurance linked to a mortgage loan.
Compensation in the event of job loss: be aware of waiting periods and deductibles
What is the compensation for a job loss guarantee?
Compensation in case of job loss depends on the insurance contract you have taken out. It is therefore important to carefully study the terms of compensation at the time of your subscription.
The guarantee can cover the entire monthly payment of your mortgage loan or only part of the amount owed to the lending bank. In some cases, a partial compensation can be calculated on the basis of the daily allowance that the borrower has received. In other cases, the insurance covers the payment of interest on the loan and postpones the payment of the capital at the end of the loan. In general, insurance companies offer coverage of between 30% and 80% of the monthly amount of your mortgage loan.
Job loss guarantee: what is the duration of the compensation?
How do I trigger my a-kasse compensation?
When you meet all the conditions to get job loss insurance in connection with a mortgage loan, you must provide your insurance company with documents justifying your professional situation. For example: your employment contract, a letter of dismissal, a Pôle Emploi certificate… When you find a job, you must immediately report it to your insurance company.
Job loss insurance: Play the competition and negotiate the price
The average cost of job loss insurance varies between 0.1% and 0.6% of the total mortgage amount. It is often interesting to compare offers and prices to play the competition. You can negotiate directly with the insurance companies of your choice at any time and renegotiate the amount of the insurance premium. It is also possible to negotiate a compensation system that develops over time. In this case, the subsidized amounts are significant the longer the years go by.
To note
It is possible to cancel your job loss insurance at any time by sending a registered letter to your insurance company. The job loss guarantee ends automatically when your mortgage expires.
Insurance: French expectations have evolved since the Covid-19 crisis
Another notable impact of the Covid-19 crisis: respondents say they emphasize social and environmental responsibility (CSR) criteria when choosing an insurance company. Half of 18-24-year-olds say they are ready to give up their insurance company for a more responsible competitor, even if the insurance costs were higher.
The French place job loss insurance (or unemployment insurance) in third position in terms of priority (34%), after health/illness cover (64%) and death (42%). Thus, 14% of respondents said they were interested in insurance services that cover the risks associated with remote work.
According to an OpinionWay survey, published in October 2021 for the Mazars firm, French expectations regarding insurance have evolved since the Covid-19 crisis. In fact, French households say they want to protect themselves more. This is especially the case for women and young borrowers. They have been the most exposed to the economic consequences of the health crisis.
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