Among the costs of real estate credit, borrower insurance can sometimes weigh heavily. Should we then necessarily take it? If in the texts, nothing prevents taking out a home loan without, the reality is quite different.
A drop of 34.7% in the months of August and September compared to the same two months of last year: times are difficult for the production of mortgage loans. In question, the rise in interest rates, but also for some borrowers (especially from the age of 50) very expensive loan insurance with sometimes the consequence of going above the usury rate, the maximum rate at which a bank can lend.
This insurance can either be taken out with the lending bank (we then speak of a group contract), or with an alternative insurer (often much cheaper).
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But then, is this borrower insurance compulsory? If the Banque de France recalls that no legal provision requires that a borrower be insured, one thing is certain: very few banking establishments grant credit without this famous sesame. Thus, according to Astrid Cousin, spokesperson for the insurer Magnolia quoted by the things, 98% of outstanding loans in France have borrower insurance. No legislative text makes it compulsory, but nothing obliges the bank to lend you money either, explains milie Ruben, spokesperson for the insurance company Scurimut. So she can put additional conditions on obtaining the loan, and taking out insurance is generally one of them. A notice confirmed by the service-public.fr site, which notes that it is from the moment you have obtained the agreement of an insurer that the bank will agree to make you a loan offer.
In fact, therefore, according to an analysis by the Prudential Control and Resolution Authority (ACPR) on housing finance in 2021, 91.4% of loans are covered by death insurance. Indeed, the borrower’s insurance can cover the death of the insured (in nearly 92% of cases therefore), the total and irreversible loss of autonomy (PTIA, approximately 85% of loans covered) and more rarely the loss of employment (approximately 2%, again according to ACPR figures).
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Protection for the borrower and his family
Who are the borrowers who can do without insurance? These are, for example, large rental investors, who already own several properties that they have finished repaying. If you have real estate for the same amount as the operation you want to finance, you can put it up as collateral, develops milie Ruben.
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Very often, however, banks ask for both: in addition to borrower insurance, the bank asks for another guarantee, which passes either through a surety organization or through a mortgage. Objectively, a mortgage or a bond could suffice, assures Emilie Ruben. But in the context of a mortgage not coupled with borrower insurance, the bank can seize your property to reimburse itself in the event of default, regardless of the reason for the latter. The borrower therefore risks losing his property, while the borrower insurance will allow him to keep it in the event of an accident in life.
As you will have understood, if it blocks certain borrowers today, borrower insurance is above all security for the borrower, as well as for his family. In the event of death or total and irreversible loss of autonomy of the borrower, the insurer will replace him for the reimbursement of the capital within the limit of the insured portion. Take the example of a couple who would have borrowed 200,000 euros with a quota of 50% per head. In the event of the death of one of the two borrowers, the insurer will take over and reimburse 50% of the amount remaining on the loan.
However, borrower insurance does not necessarily have to cost a fortune. Since September 1, 2022, thanks to the Lemoine law, it has been possible to change borrower insurance at any time, without waiting for the anniversary date of your contract, and thus save money.
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