Loan insurance can also be negotiated

I negotiate to save money

There can be no mortgage without loan insurance! This insurance covers you in the event of accident, disability or unemployment (optional coverage) that could prevent you from making your monthly payments. It is calculated on the basis of what is known as the loan insurance rate and the total cost of borrowing. The loan insurance rate is determined according to the borrower's "profile" (state of health, age, professional situation, etc.). The larger the loan, the higher the cost of insurance, which can represent up to 30% of the cost of credit. That's why it's worth taking advantage of the competition to make substantial savings.
This is the aim of the Lagarde law, which allows you to take out insurance with the organization of your choice (and no longer with the bank where your loan is domiciled). This gives you the opportunity to opt for individual rather than "group" insurance (where the offer is collective, with standard cover at a single price and mutualized risks). By looking for the most competitive offer, you can save up to 50% on the bill!
Let's take the example of an executive couple with a permanent contract, born in 1994, who borrow €250,000 over 25 years to buy their main home. With group insurance, the insurance rate is 0.36%, representing a total insurance cost of €33,600. With individual insurance, the insurance rate is only 0.15% and the cost of insurance €14,880. This represents a saving of €18,720 (source www.magnolia.fr).

To sum up

Several successive pieces of legislation have given you the freedom, under certain conditions, to choose your insurer for the insurance of your mortgage :

• - The Lagarde law of 2010 allows you to take out loan insurance with the organization of your choice rather than your bank's group insurance, so that you can choose the offer that suits you best at the best price
  - The Hamon law gives you the option of to cancel your loan insurance during the 1st year of the contract, provided that the cover offered is at least equal to that provided in the initial contract
  - The Sapin 2 law (and the Bourquin amendment): since January 12, 2018, it allows annual cancellation of loan insurance for all existing contracts, always on condition that at least equivalent guarantees are taken out.

I renegotiate to get a tailor-made contract

You already have loan insurance, but it seems too expensive or unsuited to your situation. This is your chance to renegotiate your contract. This offers two main advantages: better cover and cost savings.
You can consider renegotiating your contract on each anniversary of the date you signed your loan offer. Take advantage of this deadline to look for more attractive rates, or take the time to discuss it with your banker or insurer to obtain a lower rate. On average, borrowers who renegotiate their loan insurance save between 20% and 60% on the overall cost of their insurance. Over 20 years, your loan insurance is almost halved!
For example, a couple, each aged 40 and 36 respectively, borrowed €250,000 over 20 years in September 2013. They cancel their contract in September 2018 in favor of delegated insurance, reducing their insurance rate from 0.30% to 0.06%. In the end, they save €19,743.
Another situation: for a 35-year-old borrower, the total amount using his bank is €18,600, whereas he can hope to find a competitive offer for €3,500, a saving of €15,100!

I cancel while complying with regulations

To cancel your loan insurance, you must respect a notice period. Otherwise, your insurer has the right to refuse it. The notice period is :

• 15 days at the latest before the first anniversary date of the insurance contract, in the case of a Hamon cancellation ;
• up to 2 months at the latest before the contract expiry date for an annual cancellation (Bourquin law cancellation).

You must cancel yourloan insurance contract by registered letter with acknowledgement of receipt. If this formality is not respected, your request may be rejected.
In addition to these notice periods, you'll need to shop around to find a plan with similar coverage to your old one. Since 2015, to check the equivalence of cover, banks and insurers have been obliged to give you a standardized information sheet. This is a standard document enabling you to clearly see the scope and equivalence of the level of cover required according to your borrower profile.
Once you have submitted your request, the bank has ten days to review it and give you an answer. If the cancellation is accepted, the bank will draw up an amendment to your credit contract. If the answer is negative, you must give reasons in writing. This allows you to revise your request, adapting it to the requirements of your lending institution.

Use a broker

If a broker can help you find a loan at an unbeatable rate, he or she can also negotiate an insurance policy on your behalf, with conditions tailored to your profile and budget.

Marie-Christine Ménoire