Buying real estate: group insurance or individual insurance?
Do you want to invest in real estate? The question of insurance then arises. Which is better to choose: group insurance or individual insurance? Discover the characteristics of both and make your choice.
Group insurance: what do you need to know?
Currently, around 90% of future buyers who take out a home loan choose the insurance contract offered by the lender. This group offer is also called “group insurance”. It is negotiated with an insurer who will assess your file using a health questionnaire that will then allow it to classify you into one of the existing categories of borrowers: senior, young under 30... This ranking will determine the rate that corresponds to your profile. With group insurance, the risk is shared. The cost is calculated based on what category of borrower you belong to and not based on your personal case. The benefits? The insurance company will ask you for fewer supporting documents, so the procedures and formalities will be faster. However, it is also a less flexible solution. The insurance amount is calculated at the beginning of the loan and based on the capital borrowed. It does not change until the loan is fully repaid. For example: if you take out a loan of 200,000 euros over 15 years with 0.20% loan insurance, this will cost you an annual cost of 400 euros, or 6,000 euros in 15 years. But be careful, nothing forces you to choose group insurance. Moreover, your banker is obliged to inform you of your right to take out individual insurance. This is called insurance delegation.
Individual insurance or insurance delegation
When we talk about individual insurance or insurance delegation, we refer to a contract taken out of the lending institution. But be aware, various conditions must be met to be able to take out individual insurance. In particular, you must be able to find a contract that offers the same guarantees as that of your bank's group contract. This is called the principle of equivalence of guarantees. The cost of individual insurance is calculated based on the capital that is outstanding (remember, for group insurance, it is calculated on the initial capital). Premiums can therefore decrease or increase depending on various factors (illness, etc.) .With individual insurance, you can reduce your contributions by 50% on average. You can also choose additional guarantees and thus create a personalized contract adapted to your situation. If the lender refuses a delegation contract, it must justify its decision in writing. This refusal must also be precise, dated, but also explicit.
Choosing insurance: what to pay attention to
Before choosing your insurance, pay attention to various elements such as: The amount chosen: this is the portion of the capital to be guaranteed, defined with the banker and according to your income; Guarantees and their conditions: for example, check if you are fully reimbursed, in case of Total and Irreversible Loss of Autonomy (PTIA guarantee). Also, check the number of guarantees included in the contract. The age until which you will be covered by these various guarantees; Your coverage if you buy abroad...
Mandatory and optional guarantees
We have just mentioned guarantees. Be aware that some are mandatory and others are optional. Thus, the Death Guarantee is mandatory for everyone and allows banks to continue to receive the money even in the event of the death of the borrower. The PTIA guarantee, mentioned earlier, is also mandatory for everyone and is generally linked to the first. In case of PTIA, your insurance covers all of your monthly payments. As for guarantees that are often, but not automatically requested (especially for rental investments), include the ITT guarantee (Total Temporary Incapacity to Work) and the IPT guarantee (Total Temporary Incapacity for Work) and the IPT guarantee (Total Permanent Disability). For ITT, the disability rate taken into account is that set by the insurer's medical advisor. There is also the IPP (Permanent and Partial Disability) guarantee, which works on the same principle as the IPT, but with a coverage rate that starts at 33% and not at 66%.
The Job Loss Guarantee is optional and only concerns people who have been on a permanent contract for at least one year. It is also sometimes called Unemployment Guarantee and covers people for a maximum of two years in general. You now know more about insurance contracts and know the characteristics of group insurance as well as those of individual insurance. If you are looking for a property in the Paris region — apartment, house, studio... —, do not hesitate to contact HOME SELECT. We would be delighted to manage your real estate search and to share our experience and expertise with you. Do you have questions? We are here to answer them.
