Borrower insurance: in which cases are you protected?


What are the guarantees that make up borrower insurance? (Photo credits: Adobe Stock – )

Backed by a mortgage, the borrower insurance takes over in the reimbursement of the bank in the event of default by the borrower. But what exactly are the scenarios that are supported? Do you understand the concepts of disability or incapacity? Here are the explanations you need to make an informed choice about the guarantees that will protect you in the event of a problem.

What are the different guarantees offered in borrower insurance?

Originally, home loan insurance was a variation of death insurance. In the event of the death of the borrower, it therefore joins the outstanding capital with the lending institution.

Be careful, especially if there are several borrowers. In this case, the insurance takes care of the reimbursement according to what is called the “insured quota”.

For example, in a couple, if one of the spouses is insured at 50% and the other at 100%, in the event of the death of the first, the insurance covers 50% of the capital remaining due, and if is the other who dies, the insurance will cover this time 100% (all therefore) of the capital remaining due.

However, mortgage loan insurance goes further than simple death insurance and your insurance company can offer you additional guarantees to strengthen your coverage.

As for the death guarantee, you will have to define the guaranteed portion for the guarantees taken out.

Thus, generally, borrower insurance will include at least, for the bank to deem it sufficient, a death guarantee, but also a partial or total permanent disability guarantee (IPP or IPT), a total and irreversible loss of autonomy guarantee (PTIA) and a total temporary incapacity for work (ITT).

How do the additional guarantees of mortgage credit insurance work?

Behind sometimes complicated names and acronyms hide guarantees that are activated according to the seriousness of the borrower’s health and the consequences on his ability to work and therefore to repay his mortgage.

Total temporary incapacity for work (ITT):

The ITT is established when, due to an illness or an accident, the insured is temporarily unable to carry out both his usual professional activity and any other activity that could provide him with income.

Permanent disability:

Depending on the degree, we speak of Permanent Partial Disability (IPP) or Total (IPT):

– We are talking about permanent partial disability (IPP)

when, due to an accident or illness, and after stabilization of his condition, the insured can no longer exercise a professional activity and his degree of disability is established between 33 and 66%, according to the scale established by the insurer.

– On the talk of total permanent disability (IPT)

when, due to an accident or illness, and after stabilization of his condition, the insured is recognized as unfit for any professional activity that could bring him an income, with a disability rate established at more than 66% , according to the scale of the insurer.

The total and irreversible loss of autonomy (PTIA):

Also called absolute and definitive disability (IAD), the PTIA is considered as a disability at the rate of 100% since it is established when the insured is in a particularly serious condition, which requires the permanent recourse to a third person to exercise 3 of the 4 ordinary acts of everyday life which are: getting dressed, moving around (sitting, lying down and getting up), eating, washing.

It is also possible to subscribe to other additional guarantees: thus, the mortgage loan insurance offered by Boursorama to its customers can cover death, invalidity, incapacity and also loss of employment.

A knowledge

Watch out for the age limit!

Most of the contracts authorized for an age limit beyond these guarantees no longer work. Retirement can also put an end to the validity of certain guarantees: remember to read your contract carefully to be sure.

How is the disability rate calculated?

The calculation of the degree of disability is decisive for knowing whether we are talking about permanent partial disability (IPP) or permanent total disability (IPT) and activating the corresponding coverage.

However, policyholders are often unaware of how this degree of disability is assessed.

First of all, it must be remembered that the disability rate calculated by your insurer is not the same as that calculated by Health Insurance. They bear the same name but depend on a different scale and procedure.

As for your borrower insurance, if you are the victim of an illness or an accident, the company will first wait until your state of health has stabilized in order to be able to improve it.

Then, a medical adviser is mandated by the insurance company to examine your medical file and ask if he deems it necessary for additional information or examinations. He then writes his recommendations, based as factually as possible on the medical scale pre-established by the insurer.

Depending on this rate, the insured then falls (or not) into one of the categories described above, and the corresponding guarantees are described.

If you do not agree with the degree of invalidity established by your insurer’s medical adviser, you are entitled to request a second opinion, but this will then be at your expense.

A knowledge

A scale specific to each insurer

The scale used to determine the degree of disability is specific to the insurer and may therefore vary from one company to another. It can be consulted in the general conditions of the contract.

Stephanne Coignard (redaction@boursorama.fr)

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