Life insurance disability

Real loan

In France, the banks always require of it for a Prêt real estate (it is not a Legal requirement) the covering of the risks Décès - Invalidité - Incapacité, whereas the Assurance unemployment or job loss is only optional.

Life insurance disability incapacity (ADI)

Goal

The insurance protects:

the bank , recipient of the contract
the borrower and his family. She preserves the chances of the borrower to preserve her good bought in the event of brutal loss of incomes following Invalidité or Incapacité, and she avoids transmitting the debt to her heirs in the event of Décès.

It is the Insurance company which will refund the loan in the event of death or of disability of the borrower.

Law

The contracts of Assurance are not regulated and that the contents of the Garantie S (mainly for the risks disability and disability) can strongly vary from one establishment to another.

Cost and type of calculation

The cost of the insurance represents moreover a big part of the total Mensualité of a refunding of real loan (currently sometimes up to 10% of this one).

Two types of way of calculating the contributions:

Is it on the start-up capital : the contribution is single and identical over all the duration of the credit (between 0,18% and 0,45% of the amount of the loan following the establishments)
Is on the Capital remainder due (CRD): the contribution is proportional to the capital remaining due loan thus the contribution evolves/moves monthly with the fall (between 0,50% and 0,70% of the amount of the loan following the establishments)

In practice: A contribution calculated on CRD is more advantageous over the duration of the loan but will have two disadvantages: - a higher contribution the first years which will penalize you in treasury, - It will be estimated that for a 15 Years loan, it takes 10 Years to catch up with the contribution calculated on the start-up capital

Organizations

The bank generally proposes in its Prêt real estate a Contrat of dependant insurance with another organization (standard CNP). The fact of taking the contract of insurance at the prêteuse bank is not a legal requirement.

No law authorizes a Organisme of credit to impose an insurer to guarantee the loan which it grants. However, the legislator, via the Code of consumption (L.312-9 article), forces the lender to respect the following provisions: to communicate to the borrower a note enumerating the risks, any modification made later on to the definition of the risks is opposable only in the event of formal acceptance of its share.

This possibility of subscribing near an other establishment will be interesting for you if you have less than 40 years because indeed the premiums of the contracts groups of the banks do not distinguish the contribution according to the age from subscription and thus moyennisent the costs.

Cancellation/Renegotiation

In France, the contract of insurance can be renegotiated, and can be modified during the loan. It must however be allowed by the organization lender (banks).

If no sanction is envisaged, you can cancel freely, in accordance with the article L 113-12 of the Code of the Insurances which poses the principle of a faculty of annual cancellation: " the policy-holder has the right to terminate the contract with the expiry of a one year deadline, by sending a registered letter to the insurer at least two months before the expiration date (...). The right to terminate the contract every year must be recalled in each police force (...). This provision is applicable to the contracts in progress starting from May 1st 1990. "

The article L 113-15 of the Code of the Insurances adds that the cancellation can be done:

" either by a statement made against receipt at the head office or at the representative of the insurer in the locality, or by extra-judicial act, or by registered letter, or by any other means indicated in the police".

The duration of the contract must be mentioned in very apparent characters in the police force under penalty of inopposability of this clause to assured (article L 113-15 of the Code of the Insurances).

Ensured

It is the Emprunteur, the Co-borrower or the Caution of a Prêt real estate, or associated with a SCI. The covering of the risks depends on your age and of your professional situation but also you can pay less expensive if you do not smoke and if you borrow from two.

Old of admission, Age limits cover, Retraite

The limiting age of admission to be able to profit from the whole of the guarantees varies according to the contracts (often fixed at 65 years, where only the guarantee death is allowed). The limiting age of cover, i.e. the age to which cease the guarantee, is in general the same one as the limiting age of admission, it is sometimes increased 5 years. If you are reprocessed or premature retirement, without complementary activity remunerated by the date of adhesion, only the guarantee death is proposed. The arrival at the age of the retirement for already assured people involves the suspension of the guarantees and services incapacity and disability.

Contents of the contract

Many contracts hold the covering of the risks disability and disability to the active people.

In the case or there is one Emprunteur, the situation is simple, the insurance covers this single borrower. If there are two borrowers, the insurance can cover each borrower separately. One calls the Quotité of insurance the distribution of the cover between the borrowers. The banks generally require so that this distribution take into account the incomes of each one of them, and their contribution to the refunding of the loan. It is thus advised to consider a total of share higher than 100% to compensate for any loss of income in the event of death of the one of the Co-borrowers. The calculation of the share of insurance must be correctly estimated.

Assured risks

The following risks can be guaranteed:

the death: the insurer will deal with the credit and will refund directly at the bank the balance of the remaining capital of in the main thing, within the limit of the assured share.
the absolute and final disability (or permanent and absolute), which is a disability physical or intellectual which returns to you definitively unable to exert a remunerated activity and obliges you to have the permanent assistance of a third person for the acts of the everyday life,
the total temporary incapacity of work, which is the sick leave noted médicalement,
the total or partial permanent disability, i.e. a permanent disability of rate equal or higher than 33% such as it is determined by an medical expertise.

The first two guarantees allow the full repayment of the Capital remainder due on your loan. The two others, whose conditions appreciably vary from one contract to another, deal with totality or part of your monthly payments for the period of incapacity or disability.

See too

Guaranteed of real loan
Useful informations on the insurances

Random links:

Life insurance disability

Real loan