By taking out a real estate loan, the borrower undertakes to repay the bank. But what happens if the latter dies before the end of his repayment?
If you have taken out a property loan, you have undoubtedly been invited to take out borrower insurance at the same time. If it is not legally obligatory, it remains a real prerequisite for obtaining credit. This insurance can protect the borrower in the event of temporary interruption of work (ITT), in the event of disability or even in the event of death. While certain guarantees are optional, death coverage is the basis of any borrower insurance contract. This does not mean, however, that the insurer will always be responsible for repaying the remaining capital owed on the loan in the event of the death of a borrower. Everything depends on his insurance rate, but also on the cause of his death.
1- The insurer can cover the entirety of the remaining monthly payments
Let’s take the example of a couple taking out a property loan. The bank will often ask that the loan be covered 100%. The two borrowers can each insure 50%, or, depending on each person’s income, choose to do 60%-40%, 70%-30%, etc. Conversely, borrowers can also choose to each insure themselves 100%. We then speak of 200% coverage.
Although this solution is necessarily more expensive, it is also safer in the event of death. If you borrow two, and to secure your home and your project as much as possible, choose a coverage rate of up to 100% for each insured person. Thus, in the event of the death of one of the borrowers, the remaining capital due under the loan will be reimbursed by the insurance and the co-borrower will no longer have to repay: your family is protected in fully paid real estate, we can read on the LCL website.
If the borrower is 100% insured, all the capital is repaid directly, this is unprecedented coverage, confirms Mal Bernier, spokesperson for the broker Meilleurtaux, who emphasizes the interest of such coverage: Borrower insurance of a real estate loan, if the borrower is 100% covered, it is the best life insurance in the world, because the people who survive the borrower, whether their spouse or children, are sheltered. And it’s the same thing for a rental investment. If you die, the property is repaid and the rent goes directly to the spouse or children.
2 – The co-borrower must repay part
But the insurer does not always cover the entire reimbursement. Indeed, when you borrow two, it is not uncommon to adjust the quota according to the risk and the salary of each in order to reduce the cost of insurance. The surviving spouse will remain responsible for the share for which the deceased insured person was not covered., develops Cécile Roquelaure, spokesperson for the broker Empruntis. If we are on a 50-50 split, the surviving spouse will remain responsible for 50% of the credit. The insurer will directly reimburse the bank for the portion of capital on which the deceased borrower was insured.
3 – The co-borrower must take charge of the entire credit
But it happens that the co-borrower must himself take charge of the total repayment of the loan. Because borrower insurance has exclusions. So, suicide of the borrower during the first year of the contract is not covered by the insurance. However, in the context of a property loan intended to finance the main residence, the insurer is required to provide a minimum compensation of 120,000 euros if the death by suicide occurs during the first year of subscription.
Driving accidents caused by the insured when the alcohol level is equal to or higher than the rate provided for by law, or in the event of taking narcotics or alcohol, are also excluded from the guarantees in most borrower insurance contracts. hallucinogens, medications in non-prescribed doses, according to data provided by Empruntis and taken from borrower insurance contracts.
From Mrs, practices deemed extreme by insurers may not be covered, certain contracts stipulating that accidents occurring during raids, record attempts, acrobatics, exhibitions, preparatory tests, acceptance tests, bets, challenges that could compromise integrity are also excluded. . Insurance is not a subject accessible to everyone, contracts are sometimes difficult to read. However, every detail counts, you really need to take the time to read and understand your contractleaves getting help, confirms the Empruntis spokesperson.
The insurer can also refuse to cover the credit in the event of a false declaration. If the borrower has made a false declaration, for example if he was a smoker and declared himself a non-smoker, this will result in the contract being void and the loss not being covered, explains Cécile Roquelaure. Indeed, article L113-8 of the insurance code provides for the nullity of the insurance contract if it appears that the insured has provided deliberately false answers to specific questions.
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