Be careful, the bill can be salty!
When taking out a mortgage, loan insurance can significantly increase the monthly repayment.
And slow down your project since it must, from now on, be included by the bank in the calculation of your effort rate.
Here are our tips to optimize your choice.
1. Compare the price of guarantees
There is no secret: to hope to pay for the cheapest possible insurance, you have to compare, compare, and compare!
Overall, all contracts offer the same minimum guarantees (death, disability, long-term illness, etc.), but prices may vary.
“You can change insurance whenever you want, so there is room for negotiation,” underlines Bérengère Dubus, director of FI Courtage and specialist in bank-client relations.
Be careful, too, not to take out unnecessary guarantees.
Some banks, for example, offer guarantees related to professional activity to retirees, or stay-at-home mothers / fathers… “Now, clearly, this public does not need it.
And, if these people wish to change insurance, they will find themselves blocked, ”warns Astrid Cousin, spokesperson for Magnolia.fr, loan insurance broker.
2. Group or individual insurance?
In general, banks automatically offer group insurance.
Standard, it is based on a pooling of risks, according to your age, your health, etc. After having answered a questionnaire, you will be placed in a statistical category where the risk estimate is more or less high.
Conversely, individual insurance takes into account, in detail, your specific situation.
"For example, if you are young, managerial, in good health and non-smoker, it is better to go towards the individual, it will be more advantageous", underlines Bérengère Dubus.
A borrower over 40, in less good health and a smoker, will rather take out group insurance, to avoid additional costs.
3. On the initial capital or the remainder due?
When signing a loan, the borrower can choose between two types of insurance.
One on the initial capital, i.e. a fixed rate over the entire loan period.
The other is at a declining rate, which varies as you pay off your loan, so it is calculated on the outstanding principal.
Here again your profile, and your project, comes into play.
"If you buy to resell five or seven years later, the arrangements will be more interesting with an insurance on the initial capital", specifies Astrid Cousin.
On the other hand, if it is the investment of a lifetime, prefer the formula on the remainder due.
4. Beware of overinsurance
Banks may tend to overinsure.
Especially when it comes to a couple, to inflate the note.
If you borrow from two, the lender sometimes requires that each be 100% insured (death, disability ...), "without respecting the personal choice", notes Bérengère Dubus.
“If you have the same income as your spouse, you can continue to assume half of the loan.
There is therefore not necessarily an interest in insuring yourself at 200%.
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5. Ensure compensation conditions
In the guarantees for disability or long-term illness, not all contracts offer financial compensation.
Insurers are sometimes reluctant to intervene if there is not a loss of wages noted.
“Sometimes they don't take into account any medical bills you may have, for example.
On arrival, you may be in great difficulty, notes Bérengère Dubus.
It is essential to look at the compensation conditions, to avoid any bad surprises when the time comes.
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