You have found a home and your mortgage is moving forward. Before signing the insurance policy, check what it would actually pay if something went wrong. Two similarly priced contracts can protect your household very differently.
1. Accepting the bank’s policy without comparing
A bank may require insurance before granting a mortgage, but you can choose an external policy with an equivalent level of cover. Individual insurance is not automatically cheaper, nor is a group policy necessarily less protective. Compare proposals suited to your circumstances.
Ask for the standardised information sheet to understand the offer and the bank’s personalised requirements sheet to identify its exact conditions. ABE Infoservice explains these two documents.
2. Relying on a benefit’s name alone
Death, total and irreversible loss of autonomy, disability and temporary incapacity cover different circumstances. For incapacity, check whether the definition refers to your own occupation or any occupation. Age limits and cover for someone not working can also vary.
- Insured share: this sets the proportion of the loan covered for each person. With 50 % each, the covered death of one borrower normally pays only their half of the outstanding balance.
- Deferred payment period: the first weeks or months of a covered absence from work may remain your responsibility.
- Exclusions: check the activities, travel and medical conditions affected, including any conditions for buying back an exclusion.
3. Overlooking how benefits are calculated
A fixed benefit is based on the insured mortgage instalment, according to the policy. An indemnity benefit takes account of lost income and the contractual rules. This distinction matters if your employer maintains your salary or you are self-employed. ANIL explains the benefits and limitations.
4. Comparing costs over different periods
For a new mortgage, compare costs over the same full term with the same insured shares. When switching, use the remaining term. Check the French annual effective insurance rate (TAEA), any fees and how premiums change. A monthly average may differ from what is collected each year. Claimed savings without these assumptions are not enough to assess a comparison.
5. Switching without arranging the handover
The Lemoine law allows eligible mortgage insurance to be changed at any time, subject to equivalent cover. Obtain the lender’s approval and coordinate the policy dates to maintain continuous protection. Service Public sets out the steps.
Would you like to review your mortgage insurance? Prepare a mortgage insurance simulation with the amount, term and people to insure. An adviser can assess your needs beyond the headline price.
