Mortgage
Protection Insurance
by Ça assure
What is mortgage protection insurance?
Mortgage protection insurance protects borrowers by covering their mortgage repayments. If you’re ever unable to keep up with your loan payments, your insurance steps in to cover them.
Homeowners can face all kinds of situations that make it impossible to repay their loan: job loss, an accident, or even death.
With mortgage protection insurance, the bank lending you money has the guarantee that its loan will be repaid. While this type of insurance isn’t a legal requirement, most banks will ask for it anyway. It’s actually one of the key conditions for getting a mortgage approved in the first place, which is why it’s often referred to as a loan approval condition.
When you approach your bank for a mortgage, they’ll typically offer you what’s called a group policy, basically the bank’s own in-house insurance. That said, you’re completely free to turn it down. You can go through a different insurance company or work with a broker instead.
A mortgage protection policy can include several types of coverage. Some are standard across the board, while others can be added depending on your personal profile and needs.
Either way, it’s important to choose coverage that fits both your budget and the risks you need to protect against. One great way to do that is through insurance delegation, an alternative to the bank’s group policy, offered by an outside provider.
What is borrower’s insurance delegation?
Third-party insurance allows borrowers to take out mortgage protection insurance with a provider other than their bank. This was made possible by the Lagarde Act in September 2010, which opened up the borrower’s insurance market to competition. Before that, mortgage insurance was handled exclusively by banks, lawmakers saw it as a “captive” product that banks had a monopoly over. To protect borrowers and open up the market, the right to freely choose your own insurance provider was introduced.
From September 2010, borrowers could take out insurance with any provider they wanted, rather than being tied to their bank’s offering. Banks are also not allowed to raise your interest rate if you go with an outside provider.
There are however some conditions. A bank can only refuse an outside policy if it doesn’t meet their coverage requirements, meaning the alternative policy needs to offer the same level of protection as the bank’s own. This typically covers: death, total and permanent disability, partial disability, incapacity, and optionally, job loss.
Note that your bank is legally required to provide you with a detailed list of the coverage requirements needed to approve your loan.
How do you replace your mortgage protection insurance?
Since the Lemoine Act passed in September 2022, borrowers can move to a third-party insurance provider at any time. The goal of the law is to make the mortgage insurance market more accessible and after years of debate, it’s also designed to make the whole industry more transparent.
So in practice, you’re free to replace or cancel your mortgage protection insurance whenever you like. And if you’re not sure where to start, a mortgage insurance broker can help you through the process.
Opting for third-party insurance
Legally, mortgage protection insurance isn’t mandatory. But in practice, banks almost always require it and most of the time, they’ll push their own policy on you.
That in-house policy, known as a group policy, isn’t always the right fit for every borrower. So being able to choose your own insurer is a genuine step forward for consumers. Going with a third-party provider generally means better coverage at a lower price.
It also means you can get a policy tailored to your profile, whether you’re a first-time buyer, an older borrower, or someone with pre-existing health conditions. Your bank can’t block the switch as long as your new policy offers at least the same level of coverage as their group policy.
To make the switch, your bank is required to give you a standardized information sheet listing all the criteria your new policy needs to meet.
Switching insurance has no impact on your original loan terms and there are no fees or penalties involved.
Here are the 3 steps to switching your mortgage protection insurance:
- Check that the third-party policy offers equivalent coverage to the bank’s group policy.
- Apply with the third-party insurer.
- Send your bank a substitution request along with your new insurance contract, by registered mail.
Your bank then has 10 business days to accept or reject the request.
Cancelling your mortgage protection insurance
The biggest change introduced by the Lemoine Act is the ability to cancel your mortgage protection insurance at any time, free of charge. Once you sign up, you can cancel anytime.
- From June 1, 2022, all borrowers taking out a new policy can switch providers at any time.
- From September 1, 2022, all borrowers with an existing policy can switch at any time, no need to wait out their first year.
If you want to cancel an existing policy, just send a registered letter to your insurer, or to your bank if you’re on a group policy. Make sure to include the start date of your new policy.
Your bank then has 10 business days to accept or reject it. If they reject it, they have to give you a reason and it has to be a valid one, like the new policy not offering equivalent coverage.
Change your mortgage insurance with Ça assure
As a broker, Ça assure is fully committed to meeting the requirements of the Lemoine Act. Our goal is also to make the whole process as straightforward as possible when you want to switch your mortgage insurance.
If you decide to switch mid-loan, we cover the registered mail costs ourselves. We can even handle all the back-and-forth with your bank or insurance provider on your behalf. We work with multiple insurance groups and have all the tools needed to help you make serious savings on the overall cost of your loan. We’ve already negotiated deals with the insurers we work with, so you don’t have to.
If you’ve decided to switch, we’ll do everything we can to bring down the total cost of your mortgage. We’ll also guide you every step of the way to make sure your new policy is the right fit for your profile, your situation, and your needs.
Get a quote
Thinking about changing your mortgage insurance? Start by running a few quotes to see what’s out there. On the Ça assure website, you can get an estimate in just a few minutes.
It only takes 3 steps. First, enter your loan details:
- The insured loan amount
- The interest rate
- The initial loan term (in months)
- The loan you want to cover (existing or new)
You’ll also need to say whether your total mortgage borrowing is over €200,000, whether you’re borrowing alone or with a partner, and your coverage share.
Next, we’ll ask about you the coverage you want and your employment status (executive, employee, retired/pre-retired, or not currently working). Then just pick how you want your quote delivered: text or email.
We compare 8 insurers to find you the best deal for your profile. You could save up to €15,000.
Ready? Get your quote now!
The different types of coverage in mortgage protection insurance
When we talk about coverage in mortgage protection insurance, we’re referring to the different risks your policy protects you against. If something goes wrong, your insurer steps in to cover your monthly loan repayments.
The coverage options vary depending on the provider and your bank’s requirements. That said, most policies include the following as standard:
- PTIA (Perte Totale et Irréversible d’Autonomie): covers your loan if you pass away or become completely and permanently unable to carry out basic daily tasks without assistance
- IPT (Invalidité Permanente Totale): kicks in when you’re totally and permanently unable to work
- IPP (Invalidité Permanente Partielle): applies when you’re partially and permanently unable to work
- ITT (Incapacité Temporaire Totale de travail): covers you when you’re temporarily unable to work at all
- Job loss coverage: not always included, depends on your policy
Death coverage
This is included in every mortgage protection insurance policy. It kicks in if the borrower dies before a set age limit, at which point the insurer pays the bank whatever capital is still owed on the loan at the time of death, based on the insured amount.
Depending on the policy, the payout can apply from the moment you sign, or after a waiting period. It’s also worth knowing that some policies exclude certain situations, such as suicide or participation in high-risk sports.
PTIA coverage (Perte Totale et Irréversible d’Autonomie)
This coverage applies when the borrower is completely and permanently unable to work in any capacity.
At this stage, the borrower is considered to need assistance with basic daily tasks: washing, getting dressed, eating, and moving around. Most insurers also require the borrower to be receiving a disability pension. Depending on the policy, this coverage can apply up to a set age limit or for the entire duration of the loan.
IPT coverage (Invalidité Permanente Totale): Total Permanent Disability
This coverage applies when the borrower is permanently unable to work due to an accident or illness, once their condition has stabilized. The policy sets a threshold above which the disability is considered total.
A doctor assesses the borrower’s disability level, and compensation is then calculated based on a scale defined in the policy.
IPP coverage (Invalidité Permanente Partielle): Partial Permanent Disability
Similarly, the policy sets a threshold above which the disability is considered partial. A doctor appointed by the insurer assesses the borrower’s disability level based on the scale defined in the policy. IPP coverage applies when the borrower is unable to work in any professional capacity.
ITT coverage (Incapacité Temporaire Totale): Temporary Total Work Incapacity
This coverage applies when the borrower is temporarily unable to work due to an accident or illness resulting in a work stoppage. The incapacity must be total; if the borrower returns to work in any capacity, even part-time, the insurer stops covering the payments (unless the policy states otherwise).
Most policies include an age limit as well as a waiting period during which no compensation is paid. The insurer covers monthly loan payments either based on the insured amount or based on loss of income.
Job loss coverage
Job loss coverage is less common and more expensive. It kicks in if you lose your job, and typically covers you for up to two years.
Coverage exclusions in mortgage protection insurance
Like any insurance policy, mortgage protection insurance can include what are known as coverage exclusions: situations where the insurer won’t cover a claim.
Any exclusions must be clearly stated at the time you sign the policy, so there are no surprises if you ever need to make a claim.
Exclusions can be total or partial, and vary depending on the insurer and the policy. There are also two types: contractual exclusions and legal exclusions. Legal exclusions typically apply when a claim results from intentional misconduct; for example, an insurer is not required to cover a fine.
An exclusion can also apply based on the severity of the claim; for instance, your policy may only cover damages up to a certain amount.
Exclusions can also apply due to what’s called an aggravated risk. If the likelihood of a risk is higher than average, the insurer may choose not to cover it. This can include certain medical conditions, extreme sports, or high-risk occupations.
Your mortgage protection insurance policy is legally required to display all coverage exclusions in bold; there should be no ambiguity about what you are and aren’t covered for.
Premium loadings in mortgage protection insurance
A premium loading is an additional charge added to your base premium when an insurer considers you to be a higher-than-average risk.
Premium loadings are calculated as a percentage on top of the base premium. There are three main factors that can trigger one:
- Health: based on your medical history, current health, or hereditary conditions, an insurer may consider your risk profile to be above average.
- Age: the older the borrower, the higher the insurance rate for coverage like death and disability.
- Job or physical activity: a loading may apply if you work in a high-risk profession (firefighter, military, etc.) or take part in risky sports.
A BMI that’s too low or too high can also trigger a loading, as can smoking (cigarettes or e-cigarettes). If you’re a smoker, a loading is automatic. If you’ve quit, you need to have been considered a non-smoker for at least 2 years.
Insurers are free to set their own premiums and loadings based on their own criteria.
A loading can apply to one or more types of coverage in your policy: death, PTIA, ITT, IPT, IPP, non-objective medical conditions, or job loss.
Mortgage protection insurance refusal
An insurer has the right to refuse to cover your loan if they consider the risk too high. In that case, they must tell you why, and provide details if you ask. Refusals most commonly occur in the following situations:
- High-risk health condition: a long-term illness is detected, or the current state of health and prognosis are considered too risky.
- Dangerous occupation: your job involves handling weapons or chemicals, or you work in a hostile environment; this can apply to military personnel, nuclear industry workers, or airline crew.
- High-risk sports: also known as extreme sports; examples include mountaineering, hunting, paragliding, scuba diving, or skydiving.
- Advanced age: the older you are, the higher the risk of illness. Some insurers refuse coverage if you take out a loan past the age of 65.
- High-risk co-borrower: if you’re borrowing as a couple and your co-borrower is considered high-risk due to their job or health.
- Living abroad: if your country of residence isn’t on your insurer’s approved list, they may refuse to cover you. This list is based on factors like political stability, access to healthcare, and crime rates.
Medical risks and mortgage protection insurance
Getting a mortgage and insurance can be tricky if you have a pre-existing health condition. Insurers are generally more cautious about covering borrowers with what’s known as an aggravated health risk.
Each insurer assesses aggravated health risk differently; some applications are accepted without a loading, others result in a coverage exclusion or an outright refusal.
Medical conditions that fall under aggravated risk include: blood disorders, digestive conditions, autoimmune diseases, cancers, genetic conditions, organ transplants, neurological conditions, psychological conditions, and heart conditions.
If you have one of these conditions, the insurer’s medical advisor will flag concerns about your profile. The insurer will then ask for additional information, such as your treatment history or surgical records, and tailor the policy accordingly, either with a loading or an exclusion.
Your own behaviour can also be considered an aggravated health risk, smoking for example. Some insurers also include up to four additional risk categories beyond medical ones: sports risk, occupational risk, residency risk, and financial risk. For these, insurers consider the level of danger and mortality risk to be higher than average.
It’s strongly advised not to omit any health risks from your application; doing so counts as a false declaration. Mechanisms are also in place to help borrowers with aggravated health risks get appropriate coverage.
The AERAS Convention
In 2006, public authorities, industry bodies, patient groups, and consumer associations signed the AERAS Convention, standing for s’Assurer et Emprunter avec un Risque Aggravé de Santé (Insuring and Borrowing with an Aggravated Health Risk).
The goal of the convention is to help people whose health condition prevents them from getting standard insurance coverage, that is, without loadings or exclusions.
If you have or have had an aggravated health risk due to a disability or illness, the AERAS Convention applies to you. It requires insurers to apply a right to be forgotten and follow a reference grid. That said, the convention does not oblige insurers to make you an offer.
In practice, the convention applies as soon as a borrower has or has had an aggravated health risk. It includes a right to be forgotten, meaning former patients don’t have to declare conditions they’ve recovered from, provided they meet the conditions of the AERAS reference grid.
The grid lists conditions that must be declared but for which insurers cannot apply a loading or exclusion; as well as conditions that must be declared and for which insurers can charge a loading up to a set maximum, impose coverage limitations, or add specific conditions.
Note that the grid applies to loans up to €320,000, repaid by the time the borrower turns 70.
Your situation and its impact on mortgage protection insurance
To apply for a loan and get coverage, you’ll need to give your bank and insurer all the information needed to assess your profile, particularly around your employment and personal situation.
Your employment situation
Your job has a direct impact on both your mortgage approval and your insurance. For example, a permanent employee, a civil servant, and a temp worker don’t present the same repayment guarantees. Similarly, working in a high-risk profession affects your risk profile.
Your policy will be adjusted based on your employment situation. Here are the main categories that can affect your coverage:
- Retirees: from a certain age, taking out mortgage insurance is no longer possible, and some types of coverage stop applying.
- Civil servants: there are dedicated insurance products for public sector employees.
- Temps and entertainment industry workers: these precarious statuses often require additional income protection coverage. Borrowing with someone on a permanent contract can help.
- Fixed-term contract (CDD): it’s recommended to borrow with someone on a permanent contract, splitting coverage at around 30% for the CDD holder and 70% for the permanent employee.
- Self-employed and freelancers: your application needs to show stable income. Loan approval and insurance will also depend on your sector, revenue history, and how long you’ve been in business.
- Unemployed borrowers: if you’re out of work when you sign, the insurer will factor in your co-borrower’s situation and split coverage based on each person’s financial position.
Job loss coverage can cover your monthly payments for a limited period; but note that it typically only covers redundancy. It doesn’t cover resignation, mutual termination, dismissal for misconduct, or end of a fixed-term contract.
Your personal situation
Your personal situation essentially means whether you’re borrowing alone or with a partner, and whether you’re married or in a civil partnership.
If you’re borrowing as a couple, your bank and insurer will assess the risk profile of each borrower. Based on that, you’ll need to choose your coverage share, that is, how the risk is split. For example, if only one person has an income, coverage would be split 100% for borrower 1 and 0% for borrower 2.
Generally speaking, couples find it easier to buy property and get a loan than single borrowers. A single borrower needs to present a strong application showing stable income, solid savings, and a reasonable debt ratio. On the insurance side, single borrowers also have less negotiating power and can’t access the discounts insurers often offer to couples.
Insuring a primary residence vs. a rental investment
Whether you’re buying a home to live in or a property to rent out, your loan needs to be covered by mortgage protection insurance; it’s not a legal requirement, but it is a condition of getting the loan approved. That said, the policy itself differs depending on which type of purchase you’re making.
Insurance for a primary residence
Mortgage protection insurance for a primary residence covers your bank against the following risks: death, PTIA, IPP, IPT, work stoppage, and job loss.
While it’s not legally required, in practice every bank makes it a condition of approving your mortgage. Your bank will offer you their group policy, but thanks to third-party insurance, you can go with another provider and potentially get better rates and coverage that’s more tailored to your profile.
Insurance for a rental investment
Just like buying a primary residence, a rental investment requires mortgage protection insurance as a condition of the loan. That said, banks tend to be less strict when the property is being bought as a rental, since the rental income can be used to repay the loan, reducing the risk of missed payments. As a result, insurance for a rental investment is generally cheaper than for a primary residence.
Standard coverage still applies: death and PTIA. You can also add ITT, IPT, IPP, and job loss coverage depending on your situation.
One thing to note: a rental investment can be held through an SCI or SCPI (French real estate holding structures). In that case, the insurance is taken out in the names of the partners, with coverage shares split equally or based on each person’s income. Banks typically require 100% of the borrowed amount to be insured.
For example, if two partners each take 50% coverage and one of them can no longer repay, the other only needs to cover half the monthly payment; the remaining 50% is covered by the insurance.
Also worth knowing: for rental investments held through an SCI or SCPI, the cost of insurance can be deducted from property income for tax purposes.
Understanding and comparing mortgage protection insurance
Buying a property comes with a lot of admin, some of it pretty complex.
Your bank will offer you a group policy, a standard insurance contract they offer all their customers to cover repayment difficulties. But you don’t have to go with your bank. You can opt for third-party insurance and go with an outside provider instead.
To do that, you’ll need to compare offers from several insurers, which means getting to grips with what’s actually in a policy.
Understanding a mortgage protection insurance policy
Third-party insurance lets you take out your policy with a provider other than your bank. To make the most of it, it helps to understand the key clauses in a mortgage insurance contract.
First, know that every policy includes a set of standard coverage types: death, PTIA, ITT, IPT, and IPP. Some disability coverage may stop applying after a certain age.
When reading through a policy, pay close attention to the exclusions; these vary from one insurer to another and typically cover extreme sports, high-risk occupations, chronic illness, or smoking.
Also compare the duration and limits of each policy. Check whether coverage applies for the full length of the loan or stops at a certain age. Job loss coverage, for example, is often capped at between 12 and 36 months.
Two other key concepts to understand:
- Waiting period (délai de carence): the period after signing during which no compensation is paid, typically lasting 1 to 12 months.
- Deductible period (délai de franchise): a period of no compensation that starts when you file a claim, typically lasting 15 to 180 days.
Finally, check whether the policy offers flat-rate or loss-based compensation. Flat-rate means a fixed payout; loss-based means the insurer aims to restore you to your financial position before the claim, not let you profit from it.
Comparing mortgage protection insurance offers
Once you understand the key elements of a policy, you can start comparing offers from different insurers. You can use an online comparison tool, or save time by going through a specialist broker.
At Ça assure, we compare up to 8 insurers at once. You can get a quote on our website in just a few minutes and potentially save up to €15,000.
Want to know more? You can also book a call with one of our advisors directly on our site, and get everything you need to choose the right policy for your profile.
Activating your mortgage protection insurance
Found a policy that works for you? Here’s how to get it up and running.
First, you’ll need to show your bank that your chosen policy meets their coverage requirements. Get a quote from your insurer and send it to your bank. They then have 10 days to check that the policy meets their criteria and give you a yes or no.
If your bank rejects the policy, they must explain why. Rejections are almost always down to the policy not meeting the equivalence requirements; so make sure you check the standardized information sheet your bank gave you before submitting.
Already have a policy but found a better deal? You can switch. The 2022 Lemoine Act lets you cancel your mortgage insurance at any time and move to a third-party provider. As long as the new policy meets the coverage requirements, your bank has no grounds to refuse. Just send a cancellation letter and provide your bank with a quote from your new insurer.
To make things easier, you can also use a mortgage insurance broker. At Ça assure, we handle the whole cancellation process for you, saving you a lot of time.
Filing a claim
Mortgage protection insurance isn’t legally required, but it’s a key condition of getting your loan approved, and it’s there to protect you if you can no longer make your monthly payments.
If something happens, you’ll need to file a claim with your insurer. Always check your policy and its general terms first; the deadline to file a claim varies between 48 hours and 7 days depending on the policy.
Send your claim by registered letter with acknowledgment of receipt. Some insurers also let you file online through your personal account. In your claim, just describe the circumstances of what happened.
Once your insurer receives the claim, they’ll log it and send you a file to complete. You’ll need to attach supporting documents, which vary depending on the type of claim, in order to receive the compensation set out in your policy.
- In the event of death: a death certificate and a medical certificate stating the cause of death.
- In the event of loss of autonomy: a medical certificate or other proof, for example a social security coverage notification.
- In the event of redundancy: your redundancy letter or proof of registration with the French unemployment agency (Pôle Emploi).
Once you’ve submitted everything, your insurer will send you their decision and may, if needed, send a medical advisor to assess your case.
The laws governing mortgage protection insurance
Several pieces of legislation have been introduced over the years to protect borrowers. Here’s a quick overview of the key ones.
The MURCEF Act (2001)
In theory, this law was meant to ban the bundling of a loan and an insurance policy. In practice, banks found ways around it, partly because the standardized information sheet didn’t yet exist, making it easy to reject outside policies.
The Chatel Act (2005)
This law required insurers to notify customers in writing before each policy anniversary date. If they failed to do so, the customer could cancel at any time with no fees. In practice, banks largely ignored it, and most borrowers weren’t even aware their contracts renewed automatically each year.
The Lagarde Act (2010)
This law laid the foundations for third-party insurance as we know it today. It prevented banks from changing your interest rate or adding fees if you chose a different insurer, and introduced the coverage equivalence requirement.
The Hamon Act (2014)
A broader consumer protection law that also applied to mortgage insurance, allowing borrowers to cancel their policy free of charge within the first 12 months of signing.
The Bourquin Amendment (2018)
This built on existing protections by giving borrowers the right to cancel their policy once a year at the anniversary date, with two months’ notice and subject to the equivalence requirement.
The Lemoine Act (2022)
The most significant update yet. The Lemoine Act completed what previous laws had started, giving borrowers the freedom to change their mortgage insurance at any time, with no fees and no restrictions.
What does a mortgage insurance broker do?
When you take out a mortgage, your bank will offer you their group policy. But thanks to the Lemoine Act, you can go with a third-party insurer instead, and potentially save a significant amount over the life of your loan.
The downside? Comparing the market takes time. You need to understand the different coverage types, the laws involved, and the pricing conditions. That’s where a broker comes in.
What is a broker?
A broker acts as an intermediary between a buyer and a seller. In the context of mortgage insurance, that means helping you find the right policy at the right price, so you don’t have to do it alone.
What does a mortgage insurance broker actually do?
A mortgage insurance broker is a specialist in their field. Concretely, they can help you find a policy that fits your needs and budget, save you time and money, and help you understand what you’re actually signing up for.
A subsidiary of Kereis, a European leader in individual protection insurance brokerage, Ça assure has been providing mortgage insurance expertise since 2000. We go further than most brokers by handling:
- Comparing mortgage insurance rates
- Taking out your new policy
- Cancelling your old policy when switching
- Managing your insurance contract
We’re with you every step of the way throughout your property project. Our goal is to find you the best coverage for your profile, at the best price. Once your policy is signed, our team stays on hand to manage your file.
You can get an initial quote directly on our website, or book a call with one of our mortgage insurance advisors.
FAQ
Yes. Medical professionals are generally viewed favorably by banks and insurers. The main focus is on the quality of the coverage you take out.
ITT coverage is crucial. It should cover the inability to practice your specific medical profession, not just any professional activity in general.
Yes. Even partial disability can be enough to prevent you from practicing. The method used to calculate the disability rate and the compensation thresholds need to be looked at carefully.
No. It’s not suited to the realities of medical professions and can generally be left out.
Yes. The Lemoine Act allows you to change your mortgage insurance at any time, as long as the new policy meets the coverage requirements, regardless of your professional status.
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