When preparing their real estate project, borrowers don’t always think about the question of loan insurance, even though it is crucial and mandatory.
The borrower’s insurance guarantees the repayment of the loan in the event of death of the holder. Limited to the duration of the loan, it is usually supplemented by guarantees covering the risk of incapacity, invalidity or loss of employment. Here are five tips to be sure to be well covered!
Group or Individual Contract?
Choose an individual borrower contract and not the collective agreement proposed by your bank could reduce the cost of its insurance. It is now established that a bank may not refuse another contract of insurance as security for a loan other that the house contract, if it has equivalent levels of guarantee. If the bank refuses a competing contract it must then justify its choice.
How Long Should the Insurance be For?
If the loans are granted for 15, 20 or even 25 years, the actual length of detention of the property rarely exceeds 10 years. Consider this fact when choosing an insurance loan as the borrower tends to compare contracts over the duration of the loan that he contracts. However, if some contracts may present a rather low insurance rate, they tend to have heavier monthly payments in the first years. It is therefore especially advised to first-time buyers, who are more likely to quickly resell their first good to acquire a larger.
Not Only The Cost Matters!
Keep in mind that the price is not the only element to be taken into account when comparing insurance contracts, as it is always better to pay a little more in order to be better covered.
You must take into account the exclusions related to the contract, i.e. events that the insurance does not take into account. All contracts cover the death and the complete loss of autonomy, but there are different types of guarantees against occupational incapacity… All contracts do not take into account the so-called “non-potentially disease” – a barbaric term which includes diseases but also widespread diseases from back pain to psychic disorders.
Act Fast and Well
It is recommended to establish your record of insurance as soon as possible, without waiting to obtain a response from your bank on the level of the rate or the term of his loan.
The advise is worth more for borrowers who have health problems – the approach that can hang out in length in the case of complementary medical applications – or who borrow a big asset. As a general rule, once a case is a little complex, having prepared your insurance upstream allows you to obtain a more rapid agreement, and to avoid ending up stuck for an insurance issues.
Save Time on Health Examinations
The borrower shall attach to his subscription file a statement of health or a medical questionnaire, because depending on his age and the amount to ensure, some medical documents attesting to his state of health can be requested (medical report, blood profile, electrocardiogram…).
It is still possible to establish these documents by a general practitioner or a laboratory analysis, but it is recommended to go through an authorized medical center. This solution allows saving money (costs are covered in full by the insurance company which directly pays the medical center) and time. All tests and examinations requested being made in a single appointment by physicians accustomed to this type of situation and familiar with the requests from insurers, there is no risk for the documents are incomplete or lacking some information.
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