Be careful not to confuse the guarantees of the mortgage (mortgage, surety, privilege of lender of money, pledge) with the guarantees of loan insurance! These strictly concern the borrower, and more specifically their repayment capacity, when certain situations defined in the contract arise.
Even if they are not legally compulsory, these guarantees are imposed by the banks from which the borrower takes out his credit:
In the event of the borrower’s death, the company reimburses the remaining capital due to the lending organization.
- Total and irreversible loss of autonomy (PTIA)
The company will take care of the remaining deadlines, if the insured is unable to exercise a remunerative activity and if he has to resort to a third party for daily acts such as dressing, washing, moving or feed.
- Total Permanent Disability (IPT)
Coming from the second category of Social Security, the IPT corresponds to a disability rate between 66% and 99.9%. In this case, the insurer takes over entirely from the insured at the level of his reimbursements, unless this clause is not defined on a 100% share.
- Temporary incapacity for work (ITT)
When the borrower can no longer exercise gainful activity, following an accident or illness, the insurer reimburses the monthly payments, according to the defined quota and according to the terms of the contract (lump sum reimbursement or indemnity). ” a work stoppage of 1095 days, the borrower becomes disabled.
Note that apart from the Death guarantee, all of these so-called “compulsory” guarantees may be subject to a quota defined in the contract. For example, with a share of 75% in PTIA, the insurer covers ¾ of the capital remaining due, the last quarter being borne by the borrower.
Note that the guarantees imposed by the banks within the framework of a rental investment project are less important, since they are limited to the Death and PTIA guarantee, the others becoming “optional”.
Other guarantees: PPI and loss of employment
Some banks may require coverage for Partial Permanent Disability (PPI), others switch this coverage to optional options. It covers a borrower’s disability rate between 33% and 66%: the insurer then pays the part fixed in proportion to this rate and within the limit of the insured portion.
As with the PPI, certain lending organizations may request the subscription of the “back and shrink” guarantee to cover the back and mental problems of the borrower, with daily compensation.
Finally, among the systematically optional guarantees is the guarantee linked to job loss. As its name suggests, it covers the borrower in the event of dismissal or any cessation of salaried activity giving entitlement to unemployment insurance. Concretely, the conditions of application of this guarantee vary according to the contracts, but traditionally, we observe a waiting period of several months after the signing of the loan insurance, a franchise period of several months after the loss of the employment and a maximum duration of compensation.
To help you choose your contract with full knowledge of the facts: do not hesitate to consult our white paper “Borrower insurance”, it will enlighten you on the concept of quota, the method of calculating the risks applied by insurers, as well as on how to optimize your monthly payments.