Insuring your home loan means planning for all eventualities. You are never safe from an accident, redundancy or the bankruptcy of your company when you take out a mortgage. However, it has to be said that unemployment insurance for home loans operates within a well-defined framework, and it has to be said that the method of compensation varies considerably from company to company.
What is unemployment insurance for your mortgage?
Unemployment insurance is something that protects you if your employer makes you redundant. This results in a lasting loss of income and means that you can no longer make payments on your mortgage. When you sign your loan, the company will generally ask you to be in employment, to have a permanent contract and, above all, to be under 55. This is an essential condition for taking out this type of insurance.
Should you take out unemployment insurance for your mortgage?
When you work in a sector where there is a high risk of redundancy, it is important to study the issue and try to find appropriate solutions. The most important thing is to understand how it works. Job loss insurance will not do what you expect it to do for the entire duration of your unemployment. There are waiting periods and deductible periods, and only part of the monthly payments are covered. What's more, only part of the monthly payments are taken into account for a period of between 1 and 4 years maximum. This is a precaution, but not a panacea.
How does unemployment insurance for your mortgage work?
It has to be said: unemployment insurance for your mortgage only applies in the event of redundancy. In other words, if you resign or become unemployed as a result of a contractual termination, the insurance will not apply.
Unemployment insurance for home loans works in a relatively simple way. The insurer will stand in for you and reimburse all or part of your loan according to the terms of your contract and the percentage of your loan that has been defined in advance.
Unemployment insurance for home loans: is it expensive?
It all depends on whether it is based on one or two borrowers and how it is allocated. It is often necessary to count on around 0.2 to 0.3% of the loan per person. However, there can be very wide variations depending on the nature of the cover and the borrower's situation. It should be noted that some types of insurance relate specifically to the amount of credit to be repaid. As a result, their rates are degressive. Above all, there is a huge variety of formulas, and you need to study them in more detail to compare them. When you take out mortgage loan insurance, don't focus too much on the rates. A loan at 4.10 % with insurance at 0.30% is not necessarily better than a loan at 4.05 % with insurance at 0.40%.
Conditions of access to unemployment insurance for mortgages
The best way to access a mortgage is to have an open-ended contract. It has to be said that the job loss option is particularly selective. You'll usually have to meet a number of requirements, such as having been in permanent employment with the same employer for more than 12 months, being under 55, etc. However, it is possible for some banks to grant a home loan to someone on a fixed-term contract. However, they must be employed full-time for at least 90 days. However, they will only be covered by unemployment insurance if they obtain a permanent contract before being made redundant. However, not all types of job loss are covered. The guarantee cannot apply to redundancies covered by Pole Emploi.
In other words, partial unemployment, contractual termination (especially for gross misconduct) and resignation are not covered.
What about the waiting period?
Your unemployment insurance for mortgages does not apply from the moment you sign the contract. It only comes into effect at the end of two key periods: the waiting period and the excess. However, you should be aware that these two periods can considerably delay the date on which compensation begins. In the case of the waiting period, this is the first period after which the insurance does not kick in, even if the insured person has been made redundant.
You should allow between 18 and 24 months for this period. As for the deductible, this is a period of between 3 and 6 months from the date of redundancy. At the end of this period, the first payments will be made. In total, between 9 and 24 months will elapse before you are entitled to any cover whatsoever.
What steps should be taken to activate the guarantee?
When you lose your job, you will need to send your insurer your contract of employment, your letter of redundancy and a certificate for Pole-Emploi. Depending on the insurer, additional documents may be required.
How are you compensated?
Everything will depend on your contract. Cover may be total or partial, and some insurance policies offer a progressive indemnity that increases according to the duration and period of unemployment.
Compensation may also be paid immediately or after the waiting period. If the waiting period applies, this means that you may not receive any benefits for between 6 and 12 months.
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As mentioned above, the most important thing is not the rate of the loan or the insurance, but all the benefits you can derive from it. So don't hesitate to ask for a quote on our site to compare offers.
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