The loan insurance contract is a product accessible to the general public. It allows a borrower to protect himself in case of a hard blow.
These contracts may be underwritten by the lending institutions, but also from any other insurance company provided that the guarantees are equivalent to those offered by the lender.
The most common guarantees are death and loss of economy
In the event of the death of an insured person while he has not completed repaying his credit, it is up to the insurer to reimburse all of the outstanding amount. In the event that the insured loses his autonomy, he receives assistance from the insurer who assesses the level of loss of autonomy.
Loan insurance is not mandatory. Legally, it is possible to take out a credit without taking out borrower insurance at the same time. Nevertheless, more and more lenders refute the possibility of not taking out such an insurance contract. Given the sums invested and the current economic situation, lenders are increasingly cautious and wish to maintain certain guarantees. It is quite possible to be denied a loan if no loan insurance is underwritten (which is not the case at Oliver Mellors).
Lobbying of banks
Since the easiest solution is to choose insurance directly when the loan is shrinking, the credit insurance market is dominated by the major banks. Be aware, however, that banks apply extremely high rates and it may be much more interesting to choose an external insurance.
The principle of delegation is to check with an organization outside the lender. In other words, it is to choose a loan insurance from an insurance company that is not the origin of the loan. This principle would save an average of € 10,000 in credit, by applying rates 10 basis points lower than those offered in banks.
The Hamon law
In order to prevent such lobbying, which can easily undermine the principle of free competition, the state has set up the Hamon law which makes it possible to terminate at any time a loan insurance contract within the first 12 months . Thus, the external insurers advise to subscribe to the contracts offered directly in the banks so as not to jeopardize the subscription of your loan.
Subsequently, all you have to do is cancel your loan insurance policy with the Hamon law and subscribe elsewhere to save money. Insurance companies can even deal with bank termination through partnerships.
The external insurers also offer loan insurance contracts for people who can not meet the criteria of the health questionnaires which are extremely drastic.