The job loss insurance is one of the guarantees offered by the banks as part of the subscription of a mortgage insurance. But it is not obligatory. The Credither Guide returns to this feature. Visit newviewpublications.com for a summary
What is job loss insurance?
When you sign a borrower insurance, you are required to take out several guarantees. Some are mandatory standard guarantees, this is the case of death and PTIA guarantees (total and irreversible loss of autonomy). Others are mandatory, but only in connection with the acquisition of real estate: IPT (total permanent disability) and ITT (temporary and total incapacity for work) guarantees.
Finally, a last category concerns optional guarantees. The job loss guarantee is one of them. The principle? If the borrower loses his job, the mortgage insurance is responsible for repaying the monthly installments of the credit.
So much for the principle in general. The conditions of application (duration of indemnification, age limit of subscription, waiting period…) depend on insurers. Note that another guarantee is optional: the partial permanent invalidity guarantee, which supplements the IPT guarantee.
Job loss insurance: how to benefit?
Although optional, this guarantee is not open to all employees. Condition sine qua non: the borrower must be on a permanent contract (contract of indefinite duration). On the other hand, employees who have resigned, who are being fired or are on probation are not concerned. Categories such as the professions, craftsmen, farmers or traders can not benefit.
The number of months in the company also comes into play. Banks may require up to 1 year of seniority. Age is also a determining factor: a ceiling varies according to the banks, generally between 55 and 65 years old.
What is the amount of compensation?
It depends on your contract and the insurer. But it is important to know that monthly mortgage payments are not supported in their entirety. Coverage generally ranges from 30% to 80%.
Limited warranty and indemnity times
In the same vein, the unemployment guarantee provides for a double limit in terms of time:
First, the duration of compensation does not cover the entire repayment of the credit. It can extend up to 48 months;
Second, a time limitation is provided for the period of inactivity.
Attention to waiting periods and deductible
Borrower insurance contracts provide for waiting periods and deductible periods. The first refers to the period following the signing of the contract, during which time you will not receive any compensation. Depending on the insurance organization, the delay can be up to 1 year.
The second concerns the waiting period between the loss and the moment when the insurer comes into play (up to 6 months after the payment of employment center benefits). During this time, you will have to repay your deadlines yourself.
How much does job loss insurance cost?
Again, it depends on your insurer and the method of calculation chosen. The cost of mortgage insurance is calculated:
either on borrowed capital (between 0.3% and 0.7%);
either on loan maturities (between 1% and 7% of monthly payments).
A mortgage insurance comparator to benefit from the best offers
As you can see, there are several things to consider when planning to sign a job loss guarantee.
To help you in your choice, why not go through a mortgage insurance comparator ? By putting insurers in competition, you increase your chances of getting the best guarantees at the best price.
For the record, it is possible to compare credit insurance:
when you are negotiating your mortgage with your banker
up to 1 year after signing the mortgage loan (Hamon law);
on each anniversary date of the insurance contract, after the expiration of one year.