The mortgage insurance quota, what is it?
The insurance quota relates to the share of the compensation that the insurance company guarantees. This is therefore your level of cover in the event of an injury that may occur such as loss of work, death, disability, interruption of work, etc. The borrower can ask the bank for an offer on home loan insurance before defining the quota percentage.
If you borrow alone, the minimum insurance is 100%. Your entire loan will thus be covered. You have no more to reimburse in the event of an injury. The insurance covers your monthly benefits. But if you borrow together, the share is divisible between you and the other borrower. You can therefore choose a quota of 50% per borrower and obtain 100% in total. In this case, you get 50% of the borrowed capital covered in the event of your co-borrower’s death or disability. You simply have to repay your share of the capital. It is also possible to choose a quota of 100% each, i.e. 200% in total. All will be covered 100%. If your co-borrower experiences damage, the entire capital is covered by the insurance company.
How to choose the right amount of mortgage insurance?
In order to choose an insurance quota, it is essential to take into account the financial capacity of the co-borrowers. It should be ensured that their income is equal. A 100% quota per Borrower is the most recommended to offer everyone optimal protection. However, its cost is higher. For borrowers with similar incomes, it is better to choose the quota of 50% each. There is the differentiated quota, for example 60% – 40%, 70% – 30%, etc. This option is ideal if the co-borrowers have greater differences in resources. Whoever has a significant income will have the highest quota to protect their loved one in case of hardship.
Since the September 2022 Lemoine Law, the quota has a big impact on whether you have a health questionnaire or not. If your insured capital is less than 200,000 euros, you will not actually have a health questionnaire. This can therefore be an additional argument for using the quota (reduce a little bit if possible) so that each borrower is below the threshold of €200,000 and is thus exempt from medical formalities. Or only one of the borrowers, if the latter has health problems and prefers not to disclose this to the insurance company.
When choosing the quota, you must take into account the state of health and trade of each individual. As a general rule, you are free to choose the quota. In some cases, the financial organization may impose it. Although risk sharing can reduce the cost of your insurance, it is advisable to choose the best deal to save more. For example, you can use the Réassurez-moi online comparator to obtain offers adapted to your needs, and this specialized actor, in addition to helping you save money, can accompany you for free in every step.
What influence does a quota have on the price of your borrower’s insurance?
The quota percentage can vary the size of the contributions. However, it does not affect the rate of mortgage insurance. If you choose a 100% quota, the cost of the insurance corresponds to the total loan amount. The insurance quota of 200%, on the other hand, can double the amount of your contributions. As the insurance coverage is stronger, the premium will be higher. Borrowers will be better covered in the event of damage.
How do you change the quota on your borrower’s insurance?
You can change the quota. For example, if you want better coverage, you can freely increase it. To change your quota, it is advisable to go to your insurance company. The latter informs you of the change of your due date as well as the increase of your contribution in connection with the application of additional premiums.
It is also interesting to use a delegation of mortgage insurance. This allows you to put the various contracts on the market into competition again. You can also sign a contract that better suits your needs. You thus benefit from extended coverage and the quota increase remains financially painless. As a reminder, the Lemoine Act states that borrowers can cancel their loan insurance at any time. Also note that the lending institution is obliged to accept your insurance delegation if it offers coverage equivalent to the original one. However, be aware that in the event of a change, the bank rarely agrees to reduce the starting quota.
If you are thinking of reducing the contribution to your loan insurance, you must be aware that the total quota cannot fall below 100%. To lower it, it is necessary to request a specific letter from the bank indicating the permission to make a change.