The borrower insurance contract is not made compulsory by the Insurance Code but is required by the bank in case of loan . The choice of the group contract is based on some advantages but must be compared with an external delegation before deciding. Our file to see clearly.
Principle of the collective contract
Membership in the group insurance contract is used to cover the risks of death, disability and work stoppage. In reality, the bank does not offer this type of service directly.
It is addressed either to an insurer with whom it signs an agreement or it passes through one of its subsidiaries.
This is a group insurance contract governed by the Insurance Code ( Article L 140-1 of the Insurance Code ). The principle is as follows: the bank subscribes the contract to the profits of its borrowing customers.
She then acts as agent for the insurer from whom the contract was taken out.
Advantages and disadvantages
The loan insurance group contract has some advantages over an individual contract under delegation.
First, by allowing the pooling of risks that are distributed equitably between each insured. Regardless of age and profession, the borrower benefits from the same insurance rate. A flat, however. In the event of a health problem, the insurer may have to increase premiums or decide on partial exclusions.
Another advantage is to subscribe to a collective agreement: the subscription formalities are simplified and the health questionnaire is generally limited to about ten questions. Take care, however, to respond accurately to each of them and in case of doubt, do not hesitate to ask for confirmation in writing to the insurer.
The most important point concerns the proposed guarantees . These are generally very good and the exclusions are less important than those contained in the contracts signed in delegation.
Finally, if you are over 40 years of age or if you practice a profession at risk, it is a safe bet that the pricing will be better on a group insurance contract.
The only negative point is that on the other hand, if you are under 40 , the group banking insurance contract may be more expensive than an external delegation, collective contracts not taking into account your personal situation.
In loan insurance, the comparison between the group contract and the insurance delegation must not be limited to a single tariff approach. It is very important to detail one by one the guarantees offered and read carefully the general conditions. Not all contracts offer the same level of guarantee.
On the other hand, pay attention to the modes of application of the rate. While group contracts are generally based on borrowed capital, this is not the case with external delegations whose rate is most often applied to the outstanding capital. To compare the cost of loan insurance, it is therefore important to rely on the total premiums paid over the period.
For example, permanent disability is included in all contracts. However, this does not mean that you will be insured in the same way depending on whether the guarantee will be partial or total. In the first case, the benefit will be triggered from a disability rate of 33% . In the second case, it will only work from 66% .
Important : the level of guarantee and the contribution depend directly on the chosen quota: a percentage of 50% or 100% on each borrower do not give the same results.
The obligations of the bank
If the credit insurance group contract of your bank is subscribed in the context of a mortgage loan , the latter must attach to the contract a notice validating general conditions, detailing the nature of the insured risks.
In addition, the lending organization can not oppose the placing of an external contract as collateral if it has the same level of cover as the collective agreement.
In case of refusal of the delegation of insurance, the banker must give written reasons for his decision.