Borrower insurance: the guide to choose wisely

In brief:

1. Borrower insurance represents 0.1 to 0.5 percent of borrowed capital per year, up to 30 percent of total credit cost.
2. Since France’s Lemoine law (2022), cancellation and change of insurance are possible anytime, free of charge.
3. Insurance delegation saves on average 10 000 to 20 000 euros over a loan duration.
4. Mandatory coverages are death, PTIA and work incapacity; optional coverages depend on profile.

Financial calculations for borrower insurance — Photo via Unsplash

Borrower insurance: what it’s for

Borrower insurance protects the bank AND the borrower in case of hazards (death, disability, illness, job loss). It allows the bank to be reimbursed and the borrower or family to avoid foreclosure.

Mandatory coverages

• Death: bank is reimbursed the outstanding capital
• PTIA (Total and Irreversible Loss of Autonomy): same principle for total disability
• IPT and IPP (Permanent Total/Partial Disability): partial or full coverage
• ITT (Temporary Work Incapacity): reimbursement during illness or accident

Real cost of insurance

Insurance delegation

“France’s 2022 Lemoine law liberalized borrower insurance. Borrowers can now change insurance anytime, free of charge, as long as coverages are equivalent.” — French Ministry of Economy

Delegation means subscribing insurance with another organization than the bank. Average savings are 10 000 to 20 000 euros over a mortgage duration.

Steps to delegate

1. Request from your bank the Standardized Information Sheet (minimum coverages required)
2. Compare 3 to 5 external insurers (equivalent coverage)
3. Subscribe new contract
4. Notify bank (registered mail) with new documents
5. Bank has 10 business days to accept or refuse (motivated)

Quota: a strategic choice

Quota is the share of capital insured on each borrower. For a couple:

• 50/50: each borrower covers 50 percent of capital
• 100/100: each borrower covers 100 percent (double protection)
• 70/30: adjustment by income

A 100/100 quota costs more but guarantees the surviving spouse a total loan extinction in case of death.

For property financing, see our home loan financing guide. For insuring the property itself, see our home insurance guide. And before any purchase, the home buying checklist secures your project.

Frequently asked questions