From June 1, thanks to the Lemoine law, 50% of borrowers will no longer have to complete a medical questionnaire to obtain a mortgage. One less formality, and good news for people with an aggravated health risk who were imposed, at a minimum, an over-pricing of loan insurance. But this news worries insurers, who are threatening to increase their rates by up to 20% for all individuals benefiting from the abolition of the medical questionnaire.
This is a major novelty for all individuals who will henceforth take out a mortgage. The law of February 28, 2022 for fairer, simpler and more transparent access to the borrower insurance market, also known as the Lemoine law, comes into force from June 1 for new contracts. And, under conditions, it puts an end to the traditional health questionnaire imposed so far on borrowers by the insurer before taking out their loan insurance. A quasi-compulsory insurance to hope to obtain a loan from the bank. In the event of a major health concern preventing one of the borrowers from working or in the event of death, it is she who can repay the remaining monthly payments.
Among the various measures of the Lemoine Law, it is noted that no information relating to the state of health or any medical examination of the insured can be requested by the insurer, provided that the insured part of the total outstanding credit contracts does not exceed 200,000 euros per insured. This ceiling applies per person, which means that a couple of borrowers could get a loan of up to 400,000 euros without having to complete a medical questionnaire, as long as the credit is repaid before their 60th birthday.
The Lemoine Law, at the base, was only about termination at any time, the objective was to open up the market and give purchasing power to borrowers, recalls Milie Ruben, spokesperson for Scurimut. Afterwards, there was the intervention of the government which resulted in the addition of the right to be forgotten, and then the senators intervened at the end of January for the abolition of the health questionnaire.
What is the health questionnaire?
The health questionnaire allows the insurer to assess the risk he is taking to insure you. Among the questions that we find, are you currently undergoing medical treatment? or over the past five years, have you had one or more medical examinations that turned out to be abnormal and/or required treatment or monitoring? And of course, it is better not to lie when filling it out, otherwise your contract will be declared null and void.
Certain information, on the other hand, cannot be requested, such as your sexual practices or your genetic history.
Real estate credit: questions to ask on the health questionnaire
More than half of the contracts concerned
The site vie-publique.fr explains that this measure of the end of the health questionnaire should concern more than half of mortgages. Indeed, according to figures from the Banque de France for the year 2020, the average amount of real estate loans in France is 180,000 euros over 20 years.
However, until now, the health questionnaire was used to assess the risks, but in nearly 90% of cases, we had a standard contract, continues Milie Ruben. According to the report of the Aeras convention of 2020, a device which allows easier access to loan insurance for the sick and former sick, only 0.5% of borrowers today do not obtain an insurance proposal, i.e. about 10,000 people out of 1.7 million borrowers per year. From June 1, people impacted by the health questionnaire may have better access. In contrast, the remaining 90% may have to pay more to compensatefears milie Ruben.
If, in the text, this measure is therefore excellent news, especially for people who have or have had health problems, the end of the medical questionnaire asks several questions, starting with the reaction of banks and insurers. Today we ask to assure everyone with their eyes closed, judge Astrid Cousin, director of communication at Magnolia.fr. If the insurers will not necessarily be able to circumvent this new measure, the banks could base themselves on certain expenses passing on the account of the customers to refuse a credit file, even if the practice is normally prohibited, worries an expert of the sector.
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And even for accepted files, the price increase is also likely to be felt. People who have a Lemoine contract risk paying a little more, thinks Astrid Cousin. According to the first barmes reaching us, prices will increase by 15 20% for contracts that will no longer require a health questionnaire. Insurers pass on the fact that they now have to insure the blind.
In its February 2022 report, Actelior predicts an increase of 3 to 5% for banking contracts (the most pooled, but also the most expensive on average today) and 10 to 15% for the least pooled contracts. Today, according to Scurimut, a standard borrower insurance contract costs, for a couple, 1000 euros per year for a banking group contract and 500 euros per year for an alternative contract. Tomorrow, without medical selection, the group contract could therefore cost 1050 euros (5% change) and 575 euros for an alternative contract (+15%). Figures which are however to be taken with tweezers while waiting for the real prices.
Impacted first-time buyers?
First-time buyers who do not have a health problem are likely to lose out from this reform, according to the experts interviewed. The latter, who often borrow less than 200,000 euros per head, could therefore find themselves paying 20% more instead of being offered a preferential rate after completing the health questionnaire.
But for Christophe Boich, director of insurance at Meilleurtaux, this borrower profile will still come out a winner, in a second step: The market is still held almost 88% by the banks and there will undoubtedly still be a lot of pressure put on first-time buyers who will sign the group contract offered by the bank when signing the mortgage. But they will still have more facilities to change it later.
save up to 50% on your borrower insurance
Indeed, thanks to the termination at any time of the loan insurance, another novelty of the Lemoine law, it will be in theory much easier than today to go and see the competition. According to UFC-Que-Choisir, loan insurance is a jackpot for banks with a margin valued at 68%.
milie Ruben still has doubts: On the one hand, we have termination, which is a measure that would open up the market with alternative offers that are generally half the price of bank offers. L, due to the disappearance of the questionnaire for a large part of the files, many players will increase their prices and the change in borrower insurance will be less interesting. On the one hand we open the market, on the other we restrict the offer and interest in changing.
Borrower insurance: 4 questions still raised by the Lemoine law
Tips for avoiding price increases
To avoid the additional cost linked to the end of the medical questionnaire, several sleights of hand are already planned. Another interlocutor interviewed by Moneyvox is already considering that an insured benefiting from the abolition of the medical questionnaire can himself ask the insurer to complete one to avoid a rate increase.
Alternatively, the bank could decide to modify the insured quotas with the consent of the borrowers. For a single person, the bank already requires 100% coverage in order to recover the chances in full in the event of death or serious accident. For a couple, the bank demands an overall quota of 100% (50%+50% for example) at least.
Real estate credit: am I required to be 100% insured?
Take the case of a couple who borrows 300,000 euros and decides to be covered up to 50% per head, or 150,000 per co-borrower. In theory, the two will not have to complete a medical questionnaire. But they might have to if they decide to increase their insured quota to 100% per head. In this case they will be insured 200%, the maximum possible, i.e. 300,000 euros per person. However, the removal of the questionnaire is necessary if the loan does not exceed 200,000 euros, or 400,000 euros for two borrowers (with an insured quota of 200,000 euros for each of them). In our example, the couple will therefore have to pass a medical questionnaire. Of course, the guaranteed quota being higher, 100% insurance per head will be more expensive than 50%. But nothing says that this extra cost will be higher than that linked to the abolition of the medical questionnaire.
According to Scurimut, banks already often ask, especially for first-time buyers or for households with more modest incomes, that each co-borrower be 100% insured. Which isn’t necessarily a bad thing, believe milie Ruben: You don’t have to put in 50% to escape the health questionnaire, that would be a bad strategy. Quotas are security for you and your family. Can the banks generalize this coverage above 50%? Hard to say today. We are waiting to see what the banks will do, confirms Milie Ruben. Like every law, we can consider things but we don’t know in advance how it will happen.
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