how Franck and his wife saved €41,886.48* on their contract

Up to date 4 January 2023

by Maxence Corolleur – Head of the insurance department

Compare loan insurance when you take out your mortgage : a useful competition to cover your credit at lower costs and take out tailor-made guarantees. This insurance is actually the only protection of the borrower! It therefore deserves to be chosen with care. Here is the example of Franck who saved €41,886.48* by putting the different solutions in competition.

First, a reminder about borrower’s insurance

Borrower insurance protects both the bank and the borrower. In the event that the latter is no longer able, temporarily or not, to honor the monthly payments of his credit due to a life accident, the insurance takes over the payments according to the terms and conditions defined in the contract.

Depending on the contract chosen, it covers in particular in the event of:

• dead;
• Total and irreversible loss of autonomy (PTIA);
• total permanent disability (IPT) – when the degree of disability is greater than 66%;
• permanent partial disability (IPP) – when the degree of disability is between 33% and 66%;
• total temporary incapacity (ITT);
• non-objectifiable diseases (MNO);
• job loss (PE).

Depending on the project and the bank financing it, the required guarantees may vary. Gold with equal guarantees and according to several elements (borrower’s project, state of health, profession at risk or not, practice of a dangerous sport, etc.). the price of insurance can vary considerably.

In addition, the insurance of a mortgage loan can weigh heavily: up to more than a third of the credit costs (this is the second item after loan interest).

But if the rates are variable, so is the borrower free to compete between the different solutions on the market (group insurance offered by the bank and individual insurance) when taking out a mortgage in accordance with the Lagarde law of 2010.

The only requirement: the new contract must always be present guarantees that at least correspond to those required by the bank (it is possible to cover more if desired).

The example of Franck and his wife who saved €41,886.48* on their loan insurance

Franck and his wife, a 32-year-old executive couple who do not smoke and have no particular health problems, took out a €654,000 mortgage to buy a house in Ile-de-France. They achieved a property interest rate of 1%, for a loan taken out over 25 years. The group insurance covers them with 90% of the borrowed amount for Mr. and 75% for Mrs. (quota of 90% and 75% therefore).

By comparing the solutions on the market, Franck and his wife managed to save on everything €41,886.48 on their loan insurance, while meeting the bank’s requirements for the desired cover.

Their monthly loaner insurance contribution goes from €216.73 to €67.89.

Here are the details of their winnings:

Frank and his wife proceeded with a delegation of insurance to take advantage of this significant saving as soon as possible. However, it is not too late if a loan has already been repaid.

The Lemoine Act of 2022 allows you to change your loan insurance at any time of the lifetime of a home loan. A borrower can therefore put his current insurance in competition with market solutions in order to find a more competitive contract and thus reduce the costs associated with his credit.

*Savings of €41,886.48 to insure a repayable loan of €654,000 at 1% over 25 years, granted by Caisse d’Epargne to an executive insured at 90% (Death, PTIA/ITT/IPT/IPP/MNO, 90-day excess) aged 32, non-smoker and a senior employee insured at 75% (Death, PTIA/ITT/IPT/IPP/MNO, 90-day excess), 32 years and non-smoker, both without known medical risk . In May 2022, insurance costs offered by CNP France bank €216.73/month, TAEA 0.76% and total cost of insurance €65,020.29, compared to €67.89/month, TAEA 0.11% borrower and 0, 09% co-borrower and total cost of insurance €23,133.81 in August 2022 with CARDIF (fixed monthly payment) via Empruntis.com.