Borrower insurance: why opt for a collective contract?


The group loan insurance contract has many advantages (Photo credits: Adobe Stock – )

Leader in the home loan insurance market, the collective contract has certain advantages for many individuals wishing to guarantee a home loan.

The group borrower insurance contract is the most widespread

Borrower insurance is almost systematically requested by lending institutions to guarantee a mortgage.

The principle is simple: in the event of default and according to the conditions provided for in the contract, the insurance is activated and takes over from the borrower in the repayment of his mortgage.

It may be an individual contract, taken out with an external institution, or a group contract, taken out directly with the lending institution.

In 2019, 85% of home loan insurance was group contracts according to the report of the French Insurance Federation (FFA).

This predominance is explained by the many advantages of the collective contract:

  • Risk pooling: your risk profile is pooled with that of all borrowers who have taken out the same contract. This principle can be particularly interesting depending on your age and your state of health.
  • Price smoothing: the risk being pooled, the rates are also smoothed.
  • Ease and speed: since you take out your home loan insurance contract at the same time as your credit, with the same contact. At Boursorama, this subscription is done in just a few clicks.

How to properly analyze the cost of a borrower insurance contract?

Depending on whether it is a collective contract or an individual contract, the rates offered at the time of subscription are not the same, and for good reason:

For a collective contract, the monthly payments to be paid are the same from one end of the credit to the other, since they are calculated at the time of subscription according to the total amount borrowed.

With an individual contract, the calculation is different since it is based on the outstanding capital. An accounting subtlety which can allow certain companies to put forward attractive rates for the borrower but which will in fact go up after a few months of the life of the credit.

Unless you are a seasoned investor, it has therefore been difficult for the general public to objectively compare the overall cost of borrower insurance.

From now on, to facilitate the comparison between two coverage offers, the Lemoine law – applicable since June 1, 2022 for new contracts – requires that lending institutions must provide the borrower, on paper or any other durable medium, with a summary document mentioning the cost of the borrower’s insurance they offer.

In order to make their proposals more readable, they must also do so over a period of eight years, which corresponds according to the Advisory Committee of the Financial Sector (CCSF), to the average duration of repayment of a loan.

The borrower thus has objective elements to compare the various offers made to him, whether it is an individual contract or a collective contract.

For its part, Boursorama bank has decided to support the application of the Lemoine law by lowering the prices of its borrower’s insurance and retaining its formula for calculating the initial capital, which is both more transparent and which may prove less expensive in the first years. Already named the least expensive bank for 14 years, Boursorama has just been named the least expensive bank for mortgage credit insurance, regardless of the age or profile of the borrowers, the amount and the duration of the loan ( 1).


(1) Profideo is a recognized player in professional information in the Insurance sector. Market players (banks, insurance companies, mutual insurance companies) call on Profideo to establish analyzes of pricing policies and commercial practices. Their studies are carried out with complete objectivity and independence. Profideo study with a complete focus on the offers offered by banks to their customers through group contracts – June 2022. Details of the study on https://www.profideo.com/blog/assurance-borrower.

Stephanne Coignard ([email protected])

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