Mortgage Mortgage Insurance Death Guarantee

Mortgage Mortgage Insurance Death Guarantee

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You should systematically take out mortgage loan insurance when you take out a mortgage. Borrower’s insurance will act as coverage when the borrower is not able to pay their monthly installments after an illness or disaster. At the same time, the lender will get insurance through the refund of the amount paid. A death guarantee is part of mortgage loan insurance. This is the necessary information on the death insurance of the borrower’s insurance.

Mortgage death guarantee

The death benefit of home loan insurance means repayment coverage from a deceased borrower. In the event of a death, the insurance company will cover all remaining principal owed to the lending institution. Thus, the retinue of the insured will be freed from an unexpectedly large financial burden.

In general, loan insurance corresponds to:

  • death guarantee, which is included in the context of the mortgage loan agreement;
  • temporary incapacity for work;
  • Partial and Permanent Disability Insurance: This insurance ranges from 33 to 66% disability rate;
  • Guaranteed irreversible and complete loss of independence: his disability rate is 100%;
  • Job loss guarantee;
  • Total and Permanent Disability Guarantee: It represents a degree of disability equal to or greater than 66%.

The death benefit of the borrower’s insurance

As part of home loan insurance, a death guarantee is included in the contract. It can be included in savings insurance.

In the event of the borrower’s death, the death guarantee shall pay his mortgage. At the same time, it gives the lender a guarantee of repayment of the outstanding principal.

This is done according to the quota chosen by the borrower when subscribing to a mortgage.

Thanks to the death guarantee, the beneficiaries of the insured will receive an indirect cover. These are the heirs or co-borrower. Mortgage Credit Insurance’s death guarantee prevents them from having to give up property to pay off the remaining principal owed to the bank. In fact, If the borrower’s insurance pays the mortgage instead of the insured, the property paid will always be acquired by his heirs.

It should be noted that life insurance is not the same as death coverage for mortgage insurance. The first relates to an investment that will provide you with profits in a permanent term. The latter relates only to your mortgage.

Recipient to whom death benefits are sent

The bank requires the borrower to subscribe to the death guarantee regardless of the activity that he will undertake: purchase of a main or secondary residence, rental investment, etc. In fact, the bank has the right to refuse a loan if there is no death guarantee to secure the mortgage loan.

Borrowers are interested in death insurance and lending institutions require this insurance. Solo or with a co-borrower, regardless of their profile (age, work, health status, etc.), the amount borrowed and its purpose, death guarantee for mortgage loan insurance matters to them. The personal situation of the borrower is no longer taken into account.

Subscribe to death insurance

If participation in death and disability insurance is not required by law, the lender requires it to ensure repayment of the debt. This is true even if the borrower is facing tragic situations.

When negotiating credit, your bank will require you to take out borrower insurance as part of a group contract. However, it is possible to choose to delegate mortgage insurance to use an individual contract, which is generally less expensive. The bank can accept this authorization only in the case of the borrower being insured, with an equivalent guarantee, exposed by the insured.

Exclusions from death coverage for borrower insurance

Like other guarantees, there are also exceptions to the death guarantee for mortgage loan insurance.

Regarding the exceptions, you must necessarily go through the general terms of your contract on mortgage loan insurance in order to write them down. However, some of them are generally evaluated by any insurance company.

Various death benefit exceptions

You, as a borrower, will not get coverage in the following circumstances:

  • Death by suicide;
  • Death due to occupational activity that presents risks : fireman, courier, military, etc. ;
  • If you do not declare in the health questionnaire your illness or known illness, death due to this condition will be excluded;
  • death due to excessive consumption of narcotics, alcohol, or non-prescription drugs;
  • Any death related to a medical exclusion mentioned in the contract.
  • Exercising in extreme sports that poses a risk of death : combat sports, scuba diving, motorsports, skydiving, etc. ;
  • If you intentionally expose yourself to potential dangers of death.

A special case of exclusion: suicide

As we have seen earlier, death by suicide of the borrower is an exception to the guarantee. This is known by the borrower’s insurance. On the other hand, the insured’s suicide is required to be covered from the underwriting if the loan is intended to finance a primary residence. The maximum amount of this amount is about 120,000 euros. This exception is in accordance with Article L 132-7 of the Insurance Code.

Thus, the death guarantee of mortgage loan insurance is an essential guarantee for both the borrower and the lending institution. So it is essential to have a death guarantee when getting a mortgage.

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