Borrower’s insurance

“Death” guarantee of a borrower’s insurance policy: what does it cover?

The death guarantee is still present in a borrower’s insurance policy but is subject to an age limit. The risk of death is therefore not necessarily covered until the end of a loan.

In the event of death (regardless of the cause) and subject to the warranty exclusions provided by the contract, the insurer will pay the remaining principal due on the day of death to the lender.

The law requires that borrower insurance contracts cover death by suicide from the second year of insurance and from the first year of insurance, for loans taken out to finance the purchase of the insured’s main home within a ceiling that cannot be less than 120,000 euros.

“Total and Irreversible Loss of Autonomy” guarantee of a borrower’s insurance policy: what does it cover?

To put the total and irreversible loss of autonomy guarantee at stake, the insured must cumulatively:

• be completely and permanently unable to engage in any paid activity that could provide him with gains or profit;
• be in the absolute and presumed final obligation to use the full and constant assistance of a third party to perform 3 or 4 of the ordinary acts of everyday life (grooming, dressing, feeding, moving);
• have not reached the age limit on the contract (usually 60 or 65 years old or the retirement age).

In practice, the insurer will most often require that the insured receive a disability pension of 3rd category of a compulsory health insurance plan (Social Security, etc.). but it is not sufficient to make the total and irreversible loss of autonomy guarantee play out.

“Permanent Disability” guarantee of a borrower’s insurance policy: what does it cover?

The disability provided for in the borrower insurance contracts is a total or partial and permanent incapacity to work.

What is a total permanent disability?
Total Permanent Disability is referred to as an accident or illness and after your health is consolidated, you are recognized, as stipulated in your contract:

• Be totally unfit for any activity that can provide you with gains and profits;
• be totally unfit for the activity you were carrying out on the day of the disaster.

Most often, the guarantee is only possible if the insured has a disability rate of at least 66%.

What is a partial permanent disability?
Partial Permanent Disability is referred to as an accident or illness and after your health is consolidated, you are recognized, as stipulated in your contract:

• be partially unfit for any activity that may provide you with gains and profits;
• be partially unfit for the activity you were carrying out on the day of the disaster.

Most often, the Partial Permanent Disability Guarantee is only possible if the insured has a disability rate of at least 33% and less than 66%.

Warning: The Partial Permanent Disability Guarantee can only be purchased in addition to a Total Permanent Disability guarantee and is not offered by all contracts.

What do you need to know about assessing disability rates?
The disability rate is often determined by a combination of a functional disability rate and a rate of occupational disability.

If there is a disagreement over the assessment of the incapacity rate between the insurer and the insured, the insured will have to refer to the contract to find out what procedure to follow. He can always request forensic expertise.

“Loss of employment” guarantee of a borrower’s insurance policy: what does it cover?

More often than not, the “Loss of Employment” guarantee can only be put into play if you have been made redundant and the termination of the wage-earning activity that you are performing as a principal opens you entitled to the payment of unemployment insurance benefits (usually by the Employment Centre).

The conditions for receiving compensation are always very numerous but can be very different from one contract to another. You should therefore carefully read the contract documents to find out exactly the extent of the proposed “Loss of Employment” guarantee.

Be aware that there are usually:

• a waiting period (so-called “deficiency”) that means that the guarantee will not take effect until several months after the date of the conclusion of the insurance contract;
• a deductible period that means that compensation will not begin until several months after the loss of employment;
• maximum duration of compensation, which means that the payment of benefits is always limited in time.