By giving you credit, your bank is taking risks. Loan insurance therefore allows him to protect himself in the event of various events that no longer allow you to repay it (death, disability, etc.). It is commonly called credit insurance or borrower insurance.
Loan insurance is certainly not compulsory, but highly recommended. Indeed, a bank can refuse you your credit if you have not taken out insurance. Loan insurance will cover you in case of unforeseen circumstances.
This subscription is done via a very precise health questionnaire, to which you must answer with honesty because a voluntary omission or a false declaration could result in the nullity of the contract.
Lite Lender, expert in real estate lending, details below the different existing risks covered by a loan insurance.
Risk of disability
Whether it is a disability or a total permanent disability, the monthly payments will be fully covered by the loan insurance until the resumption of work of the borrower. Regarding partial disability, it is important to check, among other things, the extent of coverage, the degrees of disability covered and the age of end of warranty.
Risk of incapacity for work
Depending on what is clearly stipulated in the loan insurance contract, compensation will or will not be paid. So check whether it says “compensation if the borrower can no longer exercise his profession” or “compensation if the borrower can no longer exercise any professional activity”.
Risk of job loss
Compensation is indeed provided for by loan insurance but is subject to multiple conditions. Please note, this compensation takes place within the framework of an open-ended contract (CDI).
Indeed, loan insurance does not cover early retirement, the end of a trial period, a resignation, partial unemployment or even the termination of a fixed-term contract (CDD).
Regarding the CDI, the various conditions are as follows: the loan insurance knows a time limit (no more than 3 years) and many elements are taken into account such as seniority, the nature of the contract, the waiting period or deductible…
It is therefore recommended to inquire with its loan insurance to obtain all the necessary information.
Risk of death
In the event of death, the loan insurance will cover the principal owed. The same is true for very severe disabilities. However, there are specific cases subject to specific clauses, such as suicide or the practice of risky sports.
TO REMEMBER !
- Loan insurance will cover you on certain risks
- Check well in the insurance contract, the risks which are insured
- Call on a broker like Lite Lender to explain the details of loan insurance to you in detail.