Credit insurance is a guarantee for the establishment granting you the mortgage: it helps protect your banker against the risk of non-repayment. There are several types of mortgage credit insurance, depending on the risk covered: death insurance, disability insurance, temporary disability for work insurance and unemployment insurance.

Very often, the cost of credit insurance is added to the cost of the credit synthesized by the TEG, inflating the cost of your loan. The cost of insurance is therefore a hidden cost of your credit, do not hesitate to have it explained and to include it in your loan simulations, to find the cheapest credit.

 

Choose the right insurance

Choose the right insurance

But if insurance is compulsory, you are free to choose the establishment from which to contract it: you are not therefore forced to take out insurance with the bank granting you your loan. You are therefore able to take advantage of the competition in terms of insurance to choose the one that suits you best … and it costs you less!
These insurances are for the most part required by the banker, therefore compulsory. They play an important role in your negotiation of your loan with your credit institution: the more insurance you take, the more you can negotiate a reduced borrowing rate with your banker. You will be able to negotiate a cheap home loan.

In addition, these insurance contracts are subject to deductibles, that is to say the durations during which the guarantees do not work. Deductibles are negotiable with your insurer, and vary from one contract to another.

 

Death insurance

Death insurance

Principle

Death insurance covers the risk of death for the borrower. If the insured dies, the sums remaining to be reimbursed are covered by the insurance. These sums are no longer the responsibility of the deceased, they are not reimbursable by the heirs of the latter. This insurance is therefore both a guarantee for the banker but also for your heirs.

Required conditions

Death insurance requires that you complete a health questionnaire, so that your insurer knows the risk it incurs. According to this questionnaire, he may or may not refuse you insurance.

Special features

Several death insurance can be combined.
In addition, usually, this insurance is coupled with disability insurance to give a “death-disability insurance”, covering both types of risk.

Do not mix up…

Death insurance should not be confused with life insurance: if life insurance is a financial investment, death insurance gives your family a nest egg in the event of disappearance.

 

Disability insurance and temporary incapacity for work insurance

Disability insurance and temporary incapacity for work insurance

Principle

Disability insurance covers full, partial, long-term or temporary disability. It varies according to the degree of disability.
Disability is pronounced when a person’s state of health generates a 2/3 reduction in their working capacity. A pension is then paid to cope with this unforeseen event, and the insurance covers the debt contracted by the insured during the period of disability. It thus replaces the borrower with the bank.

Required conditions

Death insurance requires that you complete a health questionnaire, so that your insurer knows the risk it incurs. According to this questionnaire, he may or may not refuse you insurance.
In addition, you cannot take out disability insurance if you are over 60 years of age. You must also be affiliated with Social Security.

Special features

Disability insurance is real social protection. Its amount varies according to your life expectancy;
Disability insurance is generally coupled with death insurance, giving “death-disability insurance” and covering both types of risk.

 

Unemployment insurance

Unemployment insurance

Principle

Unemployment insurance interventions in the event of job loss. It replaces the borrower in the repayment of the loan during the latter’s unemployment.
If unemployment insurance is not compulsory (unlike death and disability insurance), some establishments require it under penalty of not granting a mortgage.

Required conditions

Unemployment insurance is subject to four conditions:

  • An age limit is imposed, varying from 55 to 60 depending on the banking institution,
  • Have taken out disability and death insurance,
  • To be able to benefit, in the event of involuntary unemployment, from the replacement income granted by the Pôle Emploi (and provided for in the Labor Code)
  • Be an employee, and have an open-ended contract (CDI). You may be asked for a minimum length of service (6 months, etc.)

In addition, the compensation period is limited to 4 years.

Special features of unemployment insurance

Unemployment insurance is often capped, as well as the duration of coverage. This varies from 18 months (the most frequent case) to 48 months. Check with your insurer to avoid finding yourself lacking.
Insurers take charge of you in a different way: some only carry over your monthly payments, others take care of them partially or completely.
A deductible is also set up, obliging you to collect your unemployment loan insurance only after a variable period (generally 90 days).

Cost of unemployment insurance

The cost varies depending on the method of calculation:

  • Either it will be based on the amount of the monthly loan repayment: it will then vary from 1 to 1.5% of these monthly payments
  • Or it will be based on the total capital borrowed, and will rise from 0.09% to 0.67% per year depending on the percentage of compensation.

Advantages and disadvantages

Unemployment loan insurance gives you some security, and allows you to limit your risk of default in the event of job loss. This type of insurance is also relatively flexible, and can therefore be taken out at any time during your mortgage.
The main disadvantage is the cost of this insurance, is the fact that the conditions for obtaining it are particularly restrictive.