Financing theacquisition of a property or making investments can mean taking out loans from financial institutions or individuals.
To prevent you from becoming unable to make repayments, these financial companies suggest that you take out loan insurance. This type of insurance offers guarantees of varying duration.
Are you looking to take out good creditor insurance and would like to know how long the cover is valid for? Are you experiencing debt problems and would like to know how long your loan insurance covers you for?
The duration of cover under a loan insurance policy varies according to the situation that prevents the insured person from honoring his or her debts: death, loss of autonomy, permanent total disability, permanent partial disability.
Loan insurance cover
The term "creditor insurance" is both simple and wide-ranging, covering all forms of credit. Whether you're talking about real estate, private loans or car loans, you can always talk about creditor insurance. It's a useful concept in many ways.
The concept of loan insurance
Loan insurance is designed to guarantee repayment of your debts. Depending on the terms of your loan insurance contract, the capital due may be fully or partially covered.
When you take out a loan and are unable to repay it because of certain constraints, your loan insurance is your support.
In the field of insurance, we speak of claims, which represent misfortunes or catastrophes, with compensation at stake. By way of guarantee, the case of loan insurance specifically covers losses such as death, job loss and other situations.
During your period of disability, your insurer will cover the costs. The duration is limited, to avoid encouraging malicious people to take advantage of the situation. French laws govern the relationship between insurer and insured. The most recent is the Lemon law, which allows you to change insurer at any time.
How can you benefit from this type of insurance?
The most important thing about borrower's insurance is that it provides you with substantial funding to cover your debts in times of difficulty. These debts can be grounds for seizure of your assets if they are equal to the debt. Otherwise, the consequences may be more unpleasant.
If you die before repayment is complete, your next of kin don't have to worry about such details. Your loan insurance takes over, and they can take possession of your estate with complete peace of mind.
To qualify for loan insurance cover, you must pay a monthly premium. Like any other type of insurance, the amount of the premium depends on your ability to pay and the structure involved. Before the contract is signed, you must also provide documents and fill in health details.
The 5 loan insurance coverages and their duration
Loan insurance guarantees are the benefits you receive when you take out loan insurance. These benefits are nothing more than the various claims that require the intervention of the insurance company.
Insurance provides 5 types of coverage, the duration of which may vary under certain conditions:
- Deaths ;
- Loss of autonomy ;
- Permanent total disability or permanent partial disability.
Guarantee in the event of death
The first guarantee provided by loan insurance is in the event of your death. If you die without having repaid your debts in full, your loan insurance takes over the remainder of the payment. The lender is reimbursed, and your loved ones are discharged from your debts.
In the case of suicide or death during intense sports activities, or even an overdose in the 1ʳᵉ year of reimbursement, the rule does not apply. An age limit is set between 65 and 70 for this benefit. The guarantee ends either when the balance of the debt is zero, or when the age limit is reached.Maintenance of sensitive areas
Certain areas, such as kitchens and bathrooms, require regular and meticulous maintenance. Janitors ensure that these areas are disinfected. They also ensure that equipment such as ovens, refrigerators and showers are in good working order.
Coverage for total and irreversible loss of autonomy
This type of coverage is frequently combined with the previous one. This benefit is granted to you in the event of serious illness or accident, leaving you unable to work and earn an income. Depending on your previous contributions, your debts are reimbursed in full or in part over a period that may vary according to the rules governing the insurance structure.
Job loss coverage
This is coverage in the event of dismissal under an open-ended contract. It is optional, and conditions vary according to the terms of the loan insurance. Repayment is covered in full or in part until you find another job.
There is also an age limit of between 50 and 55, which does not take into account certain job losses such as voluntary resignation or dismissal for cause.
Coverage in the event of total permanent disability
It covers a person who is recognized as being permanently and totally disabled. This cover is not compulsory, but is highly recommended. If you find yourself in this situation, your loan insurance company will cover the remainder of the amount due in the event of an outstanding sum.
Coverage in the event of permanent partial disability
This benefit is similar to the previous one, since they are both linked to your state of health, should this prevent you from carrying out your duties. The difference lies in the measurement of the minimum threshold rate that declares you disabled.
It is this rate that indicates whether or not coverage is required. It ranges from 33% to 65% for this benefit, and exceeds 66% for total disability.
Periods prior to loan insurance coverage
It is now assumed that you are in one of the situations where you are unable to adequately repay your mortgage or other loans. If you have met the underwriting criteria, it's only natural that you'd want the support of your creditor insurance.
Once you know the duration of the guarantee, another concern arises: when do you collect the fees to cover your loans?
From contract signature to warranty activation
Once you've signed the contract and paid the monthly premiums, you'll want to take advantage of the assistance provided by your imprint insurance company. There is a delay between the signing of the contract and the moment when the cover is activated.
This period is known as the waiting period. This period is specific to the situation of job loss.
The waiting period generally covers a period of three or six months, depending on the case, from the date of signature of the loan insurance contract. For other types of contract, this period can extend to one year.
It's important to know that the guarantee is activated as soon as there is a claim and the insurer has proof that you are no longer in a position to receive any reimbursement.
The franchise
The deductible is also a period of time after the guarantee payment date. It is relatively shorter than the waiting period. This period applies to all property insurance policyholders.
The deductible is the period of time between the activation date of your loan insurance coverage and the indemnity. It can range from 15 to 180 days.
Events such as death, accident or job loss can prevent you from settling your debts properly. You can avail yourself of the services of loan insurance companies.
These take care of reimbursements through various forms of guarantees, the duration of which depends on the terms of the contract. These guarantees do not take effect immediately upon signature of the contract.
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