Not imposed by law but generally necessary to obtain a mortgage, borrower insurance can now be easily terminated.
Borrower insurance: what is it?
When you take out a home loan, borrower insurance is included in the price. You must first complete a questionnaire about your health. Your answers will allow the insurance company to determine the coverage you need and, consequently, the monthly payments you will have to pay. Borrower insurance represents a relatively large part of the loan since it is estimated that its cost is equal to 0.25% of the total amount borrowed. These rates are obviously given as an indication and vary according to each customer profile and each establishment.
How to cancel borrower insurance?
Good news, since June 1, 2022, borrower insurance can be canceled at any time free of charge. Concretely, this means that you no longer have to wait for the anniversary date of your contract to end it. For now, this measure only concerns new borrowers. However, from next September, everyone will be able to benefit from this new feature introduced by the law of February 28, 2022 (Lemoine law) “for fairer, simpler and more transparent access to the borrower insurance market”. . But why terminate your borrower insurance contract? The main reason is the following: the savings that can be made. Indeed, while the creditor insurance market is surprisingly dominated by banks (88%), the idea is to bring competition into play in order to benefit from more attractive prices for similar or even more numerous guarantees. In some cases, the savings can reach several thousand euros over the life of the loan.
A small shadow on the board…
The termination of borrower insurance at any time is good news, but it hides less good news. MPs voted to end the health questionnaire for loans of €200,000 per person and for people aged under 60 at the end of the loan. However, the healthier you are, the lower your insurance rate and vice versa. If the health questionnaire is indeed abolished, this will be synonymous with loss of earnings for insurance establishments. The cost of borrower insurance is therefore likely to increase by 20 to 25% for healthy people.
Some additional information
The law stipulates that insurance institutions have the obligation to inform policyholders about the implementation of this right of termination at any time. They must also detail the terms and conditions. Be careful, insurers always have their say. As part of a contract change request, they have 10 days to respond favorably to the request or refuse it. In the second case, the refusal must be communicated and argued (it is understood that the reason for the refusal must be legitimate).