Real estate: our advice for getting loan insurance after 50 years

Do you want to buy your main residence, a second home or invest in stone for your retirement? Good idea, but if you’re approaching 50, finding financing will prove more difficult than expected because credit insurance – against death, disability and incapacity – will cost you dearly. Since its price is included in the calculation of the APR (annual percentage rate), and the latter must not exceed the wear percentage, your file may no longer be financed. To avoid this, “you need to apply for insurance at the same time as a loan, because it sometimes takes time to find one at an attractive price”, advises Ludovic Huzieux, co-founder of Artémis brokerage.

In the credit world, there are two families of insurance. The one offered by your bank is called “group insurance”. It offers similar guarantees and coverage to all borrowers, regardless of their profile. The only difference, “the price increases according to age group; depending on the network, it increases beyond 45 or 50”, explains Ludovic Huzieux. The other type of coverage is individual insurance or “delegated” insurance, which is obtained directly from an insurance company. The latter offers a “tailor-made” contract, the price of which is set at the most reasonable and which is different for each borrower.

If you are in good health, if you do not smoke and insure a relatively low amount, you can get a much lower insurance rate in delegation. If, on the other hand, you suffer from a pathology (cholesterol, diabetes), have recently had an operation or play a sport considered dangerous, the cost of your individual cover may not be competitive with the bank’s. In short, while delegation offers solutions, it is not a panacea.

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A piece of advice: whatever your choice, never focus solely on the price of credit insurance. “The contracts contain several clauses and are always accompanied by exceptions”, confides Jean Orgonasi, general manager of Digital Insure. For example, absolutely avoid those who refuse to cover “undeclared pre-existing illnesses”, because in the event of a problem, your insurance company may pull the plug on not reimbursing the monthly benefits to you. With individual insurance, it is not uncommon to find coverage restrictions for certain pathologies (back pain, depression, etc.), the pursuit of activities (off-piste skiing, sailing on the open sea, diving, hunting or competitive sports in particular ) or professions (many trips and residence abroad, “exposed” occupations…). Finally, if you are hesitating between two solutions, to make a good comparison, check the insurance calculation basis. Some set their monthly payments on the borrowed capital, others, at the higher nominal interest rate, on the remaining capital. It is therefore better to compare the total costs, in euros, before making your choice.

A few simple tips

To try to lower the bill, there are a few tricks. The first: if you’re approaching the date of your birthday, get insurance before you blow out your candles. “It is enough to set the date of entry into force of the contract the day before the anniversary date to save money”, states Ludovic Huzieux.

Second trick, valid if you borrow as a couple: play on the “quota” of your credit. Banks require a minimum loan coverage of 100%, mostly 50/50 on each head, or 70/30 if one earns more than the other. They often offer those who want to cover themselves more to insure the credit to 150%, for example 75/75 on each head. If one is exposed to a serious disaster, the insurance will refund 75% of the credit and the other will only owe 25% of the monthly payment. While this strategy is perfect for foresight, it increases the cost of borrowing. An alternative is therefore to continue to cover your credit at 100% and to take out individual death and disability insurance. Disconnected from the loan, it allows you to secure the payment of capital to your other half if you are exposed to a serious disaster. “This strategy costs significantly less for globally similar coverage and, above all, the extra insurance does not enter the APR”, emphasizes Jean Orgonasi.

Finally, if you are borrowing to buy a rental apartment, ask your bank to only insure your credit for death and disability. Because if you find that you cannot work, your tenant will continue to pay his rent, and your savings will be relatively low. Please note that this calculation is only valid if you have cash to cover a vacant rental space or unforeseen costs such as work. Similarly, if you take out a loan for a short period of time when you are close to retirement, there is no point in taking incapacity until the end, because once you get your pension, this cover will be useless and therefore… very expensive.


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