How to choose the right home loan insurance?
Various entities have followed, for example, the Lagarde Act of 2010, which allows you to freely choose the insurance that suits you. This means that the borrower is not obliged to underwrite the contract that the lending institution offers him. This is the delegation of insurance. However, the financial organization always offers him loan insurance to accompany the loan and it is on the product that he will achieve the largest financing margin with prices on average 30 to 50% higher than this that you can find by playing the competition. It is therefore wise to make a comparison to find the best mortgage insurance adapted to your profile. You have the option of performing the simulations online. Several brokers offer a comparator that gives you an overview of the price of loan insurance based on your insured profile and guarantees. By answering all the questionnaires, you will receive a personal offer.
What are the different types of loan insurance?
Required by the financial institution, mortgage insurance is used to ensure the borrower’s ability to repay. It ensures the organization repayment of the owed capital in the event that the latter defaults. There are two types of loan insurance:
Individual insurance
This type of insurance is offered by an institution outside the bank. The offers are adapted to the borrower’s personal situation and profile. Individual insurance is valued for its more competitive price, especially if the buyer is in good health and under 45 years of age.
group insurance
Offered by the lender, group insurance is a bundled offer with a single price. It pools the risk for all people who have taken out a mortgage.
What are the guarantees of mortgage insurance?
The mortgage insurance includes a mandatory guarantee and two optional ones. The amount may therefore vary depending on the level of coverage chosen.
The death guarantee
Mandatory, the death guarantee protects the borrower’s next of kin should he die. It therefore allows payment of the remaining capital to the bank. Generally, the irreversible and total loss of autonomy is associated with the guarantee of death.
The incapacity guarantee
This type of guarantee is optional for rental investments, but mandatory for home purchases. It protects the insurance company if he becomes unfit to practice his profession. It allows you to collect compensation. The amount of the latter is determined when the contract is signed.
job loss guarantee
Coverage for job loss is also optional. It can protect the borrower if he intentionally loses his job. He must therefore justify the receipt of these employment services.
How much does mortgage insurance cost?
The cost of mortgage insurance is defined by its effective annual insurance rate, or TAEA. This is an official calculation element that must appear in the offers. If you choose individual insurance, this will be announced to you on your contract. There are certain elements that can affect the price of your credit insurance, including:
age
The risk of death or disability increases with age. Borrowers over 60 must pay a higher interest rate. The interest rate varies on average between 0.05% for 25-year borrowers to almost 0.90% for senior borrowers.
Medical risks
Since the Lemoine law of 2022, the health questionnaire has only been made mandatory for borrowers who have an insured capital of more than 200,000 euros. For profiles in this case who have health problems, medical risks often lead to exclusion and additional premiums. These correspond to supplements added to your basic contribution.
Risky jobs
High-risk occupations are those that are subject to exclusions. They especially concern the farmer, the fireman, the policeman, the soldier, etc. There are specialist insurance companies that offer cover for this type of profile at the same price as standard jobs.
smoking
The cost of insurance can be affected by non-smoking or smoking status. The contributions are higher for smokers.
To find an insurance policy with a good price-quality ratio, you must take into account your age, your profession and your state of health. It should be noted that the quality of insurance actually depends on your situation and your profile.
Why use a broker?
Doing a home loan insurance comparison alone is not an easy operation. This is why it is preferable to apply for a credit insurance broker such as Réassurez-moi, which is a platform specializing in the product and which takes care of all the procedures for free. It gives you access to competitive offers that have similar guarantees. This professional will help you find insurance policies that offer a better price. He ensures that the proposed contract is in accordance with your situation and with the lender’s requirements. An experienced broker gives you good advice on the concept of quota, death, illness etc.