The acquisition or construction of a property is a large-scale project. It, therefore, requires considerable financial resources. In the majority of cases, project promoters have recourse to loan financing. If this option is seen as the most effective solution to complete this type of project, it is not without risks.
Indeed, it is mandatory and essential to repay creditors with the agreed interest rate, regardless of the borrower’s situation. It is to guarantee the repayment that the subscription to a borrower’s insurance is essential. So, without further ado, let’s dive into this blog and learn some of the things you need to know about insurance.
What is borrower insurance?
Borrower insurance is complementary insurance with mortgage. It indeed guarantees to creditor organizations that the borrower can repay the entire loan. For the borrower, it is also a solution to take charge of the full or partial repayment of the rest of the credit in the event of events that would prevent him from continuing to repay his loan.
What does borrower insurance guarantee?
The beneficiary of the borrower insurance is entitled to certain guarantees.
Guarantee in the event of death
This option is especially essential for the creditor organization. Indeed, the insurance company supports the reimbursement of the remaining credit in the event of the death of the borrower.
The guarantee in case of loss of autonomy
Borrower insurance also intervenes in the event of an accident or illness resulting in the loss of autonomy of the borrower. There are two types of warranty:
- The PTIA guarantee or total and irreversible loss of autonomy
- It intervenes when the beneficiary loses his autonomy following an accident.
The IPT or total permanent disability guarantee
Apart from the loss of autonomy in everyday life, this guarantee also covers occupational disability. In this case, an expert doctor assesses the dependency rate. The guarantee applies if this degree of invalidity is greater than 66%.
Guarantee in the event of sick leave of more than 90 days
For the ITT guarantee, the insurance covers the payment of the monthly payment in the event of prolonged sick leave. However, some common illnesses, such as low back pain or psychological disorders (depression), are not covered.
The guarantee in the event of job loss
The job loss guarantee covers the insured in the event of dismissal. It is an optional guarantee which makes it possible to alleviate the financial situation of the beneficiary and the time to find a new job.
Why take out borrower insurance?
Taking out borrower insurance is mandatory when you take out a home loan. Apart from being a guarantee for the creditor and the beneficiary, this insurance is a security element that should not be overlooked. Indeed, it takes care of the payment of the monthly payments in the event of a problem for the beneficiary, but also for his relatives.
How to choose a company to take out borrower insurance?
The cost of this insurance varies considerably from agency to agency. Therefore, it is essential to choose the right company to benefit from a reasonable rate. The choice also depends on the size of your project. In addition, when choosing, it is important to consider some important points:
The waiting period
The waiting period is the period during which the company does not pay out any money in the event of a claim, even if the beneficiary begins to contribute. It is generally 3 months following the subscription date.
The grace period
This is the period during which the support takes effect. It is generally 3 to 9 months after the disaster. This waiting period is not reimbursed by the company.
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