Before granting a mortgage, the bank requires borrower insurance most of the time. Thus, in the event of death or incapacity, it will be up to the insurer to take charge of the repayment of the loan. And in addition, you are also free to subscribe to a job loss insurance. However, it’s best to think twice before committing.
Job loss insurance, who is affected?
Concretely, job loss insurance covers the purchaser only in the event of redundancy. Thus, contractual termination, partial unemployment, resignation and dismissal for serious misconduct will not be covered by the insurance.
In addition, the majority of insurers do not want to cover employees over 50, nor those who are on probation.
In other words, in fact, this job loss insurance can only compensate minority of people, because redundancies are quite rare in France. Thus, according to theINSEE between 2007 and 2019, redundancies represent on average less than 5% of terminations of permanent contracts and more than 42% are made in the context of a resignation.
What compensation in the event of loss of a job?
To be compensated, the insured must present his letter of dismissal and his employment contract as well as the certificate intended for Pôle emploi.
Thus in the event of redundancy, job loss insurance makes it possible to take charge of the entire monthly payment of your mortgage or part of this monthly payment.
However, there are often a maximum amount of compensation, as well as a duration of compensation that must not be exceeded.
Likewise, there is also a waiting period as well as a franchise period. That is to say that the compensation will not be able to start immediately after job loss nor immediately after the date of purchase of the insurance.
Finally, the average job loss insurance rate is between 0.3% and 1% of the amount borrowed. So this guarantee can weigh in the calculation of your debt ratio and your wear rate. By choosing to subscribe, your mortgage may therefore be refused.
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