How much insurance to guarantee my credit
If you are considering taking out a home loan, you will also need insurance. This protects you in the event of death, disability and incapacity for work, as an option the loss of employment guarantee. When you take out this insurance, you will have to choose the loan insurance rate .
Define the right amount of insurance
The amount of loan insurance is defined by the rate of coverage chosen by the borrower and the co-borrower if it exists when joining the loan insurance.
- If there is only one borrower, the loan insurance covers this borrower, which is 100% obligatory.
- If there are two borrowers, insurance can separately guarantee each of the borrowers. We advise you to distribute the insurance premiums over a total of more than 100% to compensate for the loss of income in case of death of one of the two borrowers.
But the insurance rate on a mortgage is what?
The loan insurance portion is the portion of the borrowed capital that you insure and that will be reimbursed by the insurer in case of problems. This is the level of coverage you have in case of a risk covered by your borrowing insurance policy. Alone or with two, the minimum quota to be insured is 100%. By borrowing two this minimum insurance amount can be spread over the co-borrowers. To choose the insurance rate, it is recommended to take into account the income of each. The one who generates the most gain may for example choose a 60% quota and his spouse 40% (or 70% and 30%). If they earn an equivalent salary, they can each choose a 50% quota. It is of course quite possible for them to opt for a 100% quota. In this case, the mortgage insurance will cost them more but will allow full coverage of the repayment of the principal remaining due to the credit institution in the event of death of one or the other co-borrowers.
How to choose your mortgage insurance rate
In the case of a loan subscribed to two, to benefit from optimal protection, you are advised to opt each for a 100 % loan insurance quota . You are thus certain that the mortgage will be paid in full by the insurer in the event of the death of one of the borrowing spouses. It is true that this choice involves paying more for its mortgage insurance.
To choose the best rate of insurance according to your means, you need:
- Study your needs and evaluate your risks
- Know the amount that will be reimbursed by the insurer in case of disability
- Anticipate a possible variation of your income during the repayment of the mortgage
- See what alternative resources you can have in case of difficulties
Take the time to choose your home loan insurance premium by asking the right questions. For that, do not hesitate to consult you by a broker specialized in insurance of loan:
- Choose your mortgage insurance rate
- Adjust the guaranteed housing credit rate
- Change the amount of insurance borrower housing