Before granting you a loan, the vast majority of banks require that you take out borrower insurance. This covers you in the event of death, disability or incapacity.
For more security, you can decide to opt for the optional job loss guarantee. We tell you all about its usefulness.
What is the job loss guarantee?
Some insurers offer unemployment insurance as an option on home loans. If this represents an additional cost, it also offers a real interest.
Indeed, given the current situation and the uncertain economic climate of this period, some banks require the subscription of this guarantee, although optional.
In the event of loss of employment, it supports the monthly installments, in part or in full, of the mortgage during the period of inactivity and under certain conditions.
Be careful, however, to carefully study the general conditions of the insurance contract. Indeed, insurance companies often have their own rules regarding compensation.
Who can take out this insurance?
Although everyone is exposed to the risk of unemployment, the eligibility rules for this guarantee are drastic. Can subscribe:
- Employees on permanent contracts who have been in the company for 6 to 12 months depending on the contract;
- Employees on fixed-term contracts who have worked full-time in the company for more than 90 days and who lose their job after obtaining a permanent contract;
- Subscribers aged under 50 (or 65 depending on the contract).
Thus, employees on fixed-term contracts, traders, self-employed workers, liberal professions, craftsmen and farmers are excluded from this insurance.
As well as employees on probation or affected by a notice of dismissal.
Please note that only redundancy is covered by this guarantee.
If you leave the company of your own doing, resignation or breach of contract, if you are dismissed for misconduct or if you are on short-time work, you will not be compensated.
What compensation in the event of job loss?
The amount of compensation varies according to the provisions of the credit insurance contract:
- The entire monthly payment of your loan.
- Part of the monthly payment (for example, difference between the amount of the monthly payment and the amount of your unemployment benefit) In general, they are reimbursed from 30 to 80% of their amount.
Note that the percentage of compensation can be fixed or progressive, depending on the wishes of the insured. For example, he can benefit from a reimbursement of 40% during the first 6 months, 60% over the next 24 months and 80% during the last 6 months. This is to be agreed between the subscriber and the insurer.
However, there are often:
- A maximum monthly allowance. In general 1500€ per month and insured;
- A maximum duration of compensation (for several months only);
- A maximum compensation frequency (number of times compensation is triggered).
What are the waiting and deductible periods?
In general, compensation cannot be paid during the waiting and deductible periods.
The waiting period: these are the first months, generally between 6 and 12 months, following the date of subscription of the insurance.
During this period, the insurer will not compensate the subscriber, even if he were to be made redundant.
The grace period: these are the months, between 3 and 9 months, which follow the loss of your job before being compensated by the insurance company.
What are the steps to get compensation?
The subscriber must justify his situation by providing his insurer with certain documents such as:
- His employment contract
- His dismissal letter
- His certificate intended for employment
Be careful, when you find a job, you must report it to your insurer in the form agreed in the insurance contract.