Set the loan insurance rate to subscribe
May 9, 2019
The amount of loan insurance corresponds to the share of capital to be guaranteed
The quota corresponds to the share of capital to be guaranteed in case of disaster. Refunds from the insurance company to the beneficiary organization (in the case of death) or to the insured (in the case of incapacity for work or disability) will therefore depend on this percentage retained at the time of membership.
The total quota must be 100%
The bank will systematically charge you to cover your loan for a total of 100%. But this 100% can be divided in different ways depending on whether a person borrows alone or with two.
If you borrow alone, you will have to cover yourself for a 100% quota. You can try to negotiate with your banker a lower quota but in most cases he will ask for a 100% quota.
If you borrow two, the principle is to leave the 100% on both people, or 50% / 50%, depending on the income of each person. Thus the person with the highest household income can cover 70% and the other at 30%. In the case of the death of the 70% covered person, the insurance company will reimburse 70% of the outstanding capital to the bank and the co-borrower will only be responsible for the remaining 30% of the outstanding capital.
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A quota of 200% is ideal
The ideal case when borrowing two is to cover 200%, each borrower is covered for a percentage of 100% so that in the event of death of one of the two borrowers, the entire outstanding capital will be refunded to the bank and the co-borrower will no longer have any reimbursement.
In any case, try to transpose yourself by asking yourself the right questions: if I die, how much will my surviving spouse be able to repay without my income? Will my income go up or down in the next few years? The choice of this amount is essential for the financial security of the family in case of disaster.
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Additional coverage is possible
Note that you have the option of subscribing to additional cover and especially if you have opted for a group contract with your bank.
In this case, if you are only 100% covered by your group contract (50% for each borrower), you may decide to subscribe to another contract for an additional portion for each borrower.
In this new contract, the beneficiary is no longer the bank but the surviving spouse or the children. Thus, in the case of the death of one of the two borrowers, the capital will be covered at 50% + the additional amount you have subscribed to be paid to the beneficiary. The beneficiary can then decide to prepay the mortgage and thus pay off or keep the money to meet the remaining deadlines and expenses of daily life.