Not compulsory but almost always required, is real estate credit insurance really worth it? Everything you need to know before choosing the most suitable formula.
Home loan insurance: no unnecessary risk
Insurance of a home loan is not compulsory, but the lender can demand it, in particular with regard to the risks linked to death and disability. In the event of the borrower’s death, the insurer will then have to pay all of the capital remaining due to the lending institution. Ditto in case of disability, the insurance provides for the coverage of part of your monthly payments if your situation no longer allows you to work. Job loss insurance is less often requested by lending organizations. Its subscription is nevertheless strongly recommended, because if you were to lose your job, it would be difficult for you to assume the repaymentof the credit. Thanks to this guarantee, you will only have to pay part of your monthly payments over a period specified in the contract (the period should not exceed more than 3 years).
Home loan insurance: let the competition play
Be aware that you do not have to choose the insurance offered by the lender. Nothing prevents you from opting for another insurance contract, provided that it has a level of guarantee equivalent to that offered by the lending institution. But beware, price should not be your only criteria. Be attentive to the exclusions linked to the contract, which mention events not covered by insurance. For example, not all contracts take into account what are called “non-objectifiable diseases”, pathologies such as certain mental disorders or back problems. Another criterion not to be overlooked: the choice of flat-rate or indemnity insurance. In the first case, if the insured finds himself, for one reason or another, unable to work, his insurance will take care of the repayment of his loan taking into account the other compensation he receives. In the case of flat-rate insurance, it will not take it into account. Suffice to say that flat-rate insurance is preferred!
Home loan insurance: don’t forget the duration
Have you taken out a loan for twenty years? Be careful, nothing tells you that you will not leave your accommodation after ten years. You have to be aware of this reality when choosing insurance for your loan. Some contracts may have a fairly low insurance rate, but charge heavier premiums during the first years. It is therefore better to take it into account, especially if you are a first-time buyer and it is very likely that you will want to live in a larger accommodation in the near future.
With these tips in hand, take the time now to choose the insurance that really suits your project.