Whether by necessity or by choice, many people opt for loans to finance their projects, at the risk of seeing their debt ratio exceed the critical limit of 33%. By shouting, it becomes difficult to manage the different monthly repayments. It is therefore advisable to opt for a repurchase of credit to avoid being in over-indebtedness. In addition, the lending institution offers insurance to its borrower. It is therefore important to know whether this insurance is compulsory or not.
Everything you need to know about borrower insurance
This is a contract that allows the amount granted to be reimbursed, whatever the circumstances. Borrower insurance is very useful, because it covers the borrower in the event of loss of income, but it also ensures the repayment of the amount borrowed from the lending institution. As is the case with any other type of insurance, the borrower pays in return an annual premium, the amount of which depends on the credit.
The rates ofborrower insurance vary according to the duration of the loan, the age of the client and his medical file among others. For example, the older the borrower, the higher the premium. Whether it is a consumer loan or a repurchase of credit, it is necessary to know how to differentiate between two types of borrower insurance:
- Group insurance: also called group insurance, it is often offered by the lending institution (bank or other). As its name suggests, this type of insurance is the same for all borrowers of the financial institution with a small difference that depends on the amount borrowed.
- Individual insurance: when the borrower is not satisfied with his bank’s proposal, he can request a delegation of insurance. This time, an insurance company will take care of covering the loan.
Is it mandatory to have insurance when buying credit?
The repurchase of credit makes it possible to consolidate different loans into one, which allows the borrower to have a single credit with a single monthly payment to be repaid over a single period. It will thus be able to benefit from a reduction in its debt ratio. The repurchase of loan remains the best way to have a financial balance and to consider other investments. This type of operation concerns consumer loans (car loan, works, car, etc.) as well as real estate loans.
It is strongly advised to consider borrower insurance at the same time as a loan buy-back. Admittedly, the latter is designed to alleviate the situation of the borrower, but the duration of the new credit will become more important. Take out borrower insurance during a loan redemption allows you to reimburse in the event of:
- Partial permanent disability (IPP);
- Total permanent disability (IPT);
- Temporary disability to work (ITT);
- Total and irreversible loss of autonomy (PTIA);
- Unemployment ;
- And in case of death.
Taking out borrower insurance at the time of a loan buy-back is not compulsory, but some banks may require their client to take out insurance, in order to be able to protect the amount lent. This is particularly the case for mortgages which represent a heavier debt. The amount borrowed is often larger than other loans and the duration of this type of loan is also longer.