How do you change your loan insurance with the Lemoine Act?

What is loan insurance?

In all property loans, loans include systematic loan insurance or borrower insurance. This is a guarantee that the lending bank requires to ensure that it will be repaid even in the event of a claim, preventing the borrower from meeting his monthly installments. Loan insurance acts as protection for borrowers, but also for the bank in the event of default on repayment (death, layoff, accident, etc.). It is the insurance company with which the borrower has taken out the loan insurance, which must ensure the payment of the monthly benefits.

The borrower can choose between individual insurance or group insurance for his loan insurance agreement. The first, which is optional, is offered by the bank issuing the loan for the purchase of real estate. The insured can actually go this way and go through another institution: this is the delegation of insurance. The other, meanwhile, is offered by insurance organizations to better adapt to the borrower’s profile. As for the advantage, young buyers in good health are the most privileged because the price can quickly be half price.

Change loan insurance at any time

Termination or change of borrower’s insurance was only possible on the anniversary of your credit, with two months’ notice. Now that time is over! With the Lemoine Act, the situation has actually changed. This was enacted on February 17, 2022 and entered into force on June 1, 2022. This device relaxes all the conditions related to the modification of the loan insurance.

Each mortgage that occurred after June 1, 2022 allows borrowers to cancel or change their borrower insurance at any time during the term of the contract as they wish. However, it is imperative that the new contract offer guarantees similar to the one it replaced. Furthermore, it is not necessary to inform your bank of your decision to cancel by registered letter with acknowledgment of receipt. A simple message, letter or email is enough.

Since you no longer have to wait for the anniversary of your contract to make things happen, you can compete. Result: you will make significant savings! However, be aware that the insurance costs correspond to 30% of the credit costs. You should therefore take the trouble to compare all the offers to find the one that best meets your needs and expectations.

An inclusive right to be forgotten

A relaxation of the medical prerequisites for granting loans is part of the progress achieved by the Lemoine Act. This new rule aims to give patients easier access to mortgage loans. In the event of cancer, the borrower must e.g. no relapses after ten years after the end of treatment (5 years if the disease was discovered when he was a minor). Since March 2, 2022, this right to be forgotten period has been revised to 5 years for everyone and is more extensive for hepatitis C.

Exchanges with the signatories of the Convention are also provided by law to extend the right to be forgotten to certain chronic pathologies. Diabetes is one of them. If this negotiation does not produce the expected effects, a decree will emerge with the chronic diseases that will be approved with the right to be forgotten (before the end of July 2022).

Removal of the health questionnaire

Another visible advancement of the Lemoine Act is infra-annual termination. Apart from that, she also supported the cancellation of the medical health questionnaire. The latter allowed banks and insurance companies to assess the risks incurred by borrowers’ state of health and to set additional premiums accordingly for the majority of mortgage loans.

The borrower will no longer be obliged to complete the questionnaire under three conditions:

– The credit is less than €200,000 per insured.

– Insurance refers to a real estate loan granted to a user to finance a property to serve as a residence or mixed use (commercial and residential).

– The end date of the credit must occur before the borrower turns 60.

This deletion of the questionnaire was welcomed by various consumer organisations. Previously punished patients are good examples. They had to pay large surcharges due to their fragile state of health. It has even happened that they have been denied their profile insurance because of their risk profile.

How to use Lemoine’s Law?

Anyone can use the Lemoine Law by comparing the offers of the various dedicated service providers in this area. Free simulations are available online to estimate the cost of insurance that matches your profile. For more information, you can contact the organizations so that they can send you detailed and precise offers on this subject. They tell you about your situation. Thus, you will choose with full knowledge of the facts!

If all these steps seem tedious and rigorous, an insurance broker will take over and take care of it for you. He can cancel your current policy and take out a new one completely free of charge (because he is paid by the new insurance company). Otherwise, brokers specializing in mortgage insurance such as Réassurez-moi can also terminate your old contract to avoid administrative procedures. Your loan institution will be informed of your intention, it has ten days to give you its approval.