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Loan insurance: our recommendations to reduce the cost

The cost of mortgage insurance is about 30% of the total cost of the loan. This is a significant amount, but can be revised downward. The evolution of the law, in favor of the consumers, as well as the opening to the competition allow the borrower to save on the cost of his insurance of loan each year. Here’s how to reduce the cost.

An evolution of the legislation in favor of borrowers since 2010

An evolution of the legislation in favor of borrowers since 2010

Since 2010, with the implementation of the Lagarde law, the borrower may not accept the mortgage insurance contract presented by the lending bank, in favor of an offer made by the insurance company of his choice. However, it is essential to respect the concept of equivalence of guarantees.

In 2014, it was the Hamon law that supplemented the regulations in force, allowing borrowers to terminate their loan insurance contract during the first 12 months.

And since 2018, it is the Bourquin amendment that allows consumers to cancel their loan insurance contract each year, at the time of the anniversary of the subscription of the credit. For this, the borrower must send a registered letter to the current insurer, at least two months before the contract expiry date.

The evolution of the legislation is a pleasant news for the borrower who has indeed more room to maneuver to make a comparison of different offers available on the market and save on the cost of their credit insurance.

Save with insurance delegation

Save with insurance delegation

Regarding the borrower insurance, the first contact is the bank advisor issuing the mortgage loan offer. If the legislation has evolved, the banks always have their own credit insurance contract, which is a group insurance previously taken out with a partner insurer with the aim of providing mutual insurance to their borrowing customers.

But since the borrower has the right to freely choose his loan insurance, it is advisable to compare the bank insurance offer with other insurers’ proposals, in order to find cheaper and/ or more suited to his profile. We recall once again that the respect of the equivalence of the guarantees is an essential condition for setting up another loan insurance contract, as part of a delegation of insurance.

A level of guarantee tailored to each profile

A level of guarantee tailored to each profile

The borrower insurance protects the bank against any unpaid event. Also, it covers the borrower in case of accidents of life that prevent him from paying his monthly loan payments. And, each insured must be able to insure himself against the specific risks he may present (dangerous profession, for example). This is the interest of an insurance delegation, which allows access to insurance offers tailored to the profile of each, in addition to being able to also achieve savings.

Finally, it is essential to pay attention to the proposed coverage rate. In this regard, a couple of co-borrowers can allocate this rate, called “insurance quota”.

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