Deductible and waiting periods are often confusing notions for borrowers (Photo credits: Unsplash – Tierra Mallorca)
Borrower insurance associated with a home loan is intended to take over in the repayment of drafts in the event of default by the borrower. However, this cover is not immediately active, depending on the waiting periods and deductibles associated with the guarantees provided for in the contract.
What is a waiting period?
When you take out your home loan insurance, you are not immediately covered in the event of a claim. On the day of signature, a waiting period actually starts and you are only covered for claims (illness, accidents, etc.) that occur after that.
For example, if your borrower’s insurance contract provides for a six-month waiting period for the Total Temporary Incapacity for Work (ITT) guarantee and you have an accident in the fifth month temporarily preventing you from working, your mortgage loan repayment will not is not supported.
Good to know: The waiting period most often varies from one to twelve months, depending on the contracts but also on the guarantees to which you subscribe.
What is the difference with a franchise?
Like the waiting period, the deductible period is a period during which you are not compensated, but the starting point of the deductible period begins when the claim occurs.
Let’s take the example of the Total Temporary Incapacity for Work (ITT) guarantee:
If your accident occurs after twelve months, the waiting period is no longer taken into account.
On the other hand, if your contract provides for a grace period of 90 days, your borrower insurance will only cover the reimbursement of your mortgage on the 91st day after your accident.
A major challenge for the borrower
Although it is rarely possible to negotiate with the insurance company a modification of the waiting period or the deductible period, these elements may vary from one insurer to another, hence the importance of reading the conditions carefully. general conditions provided for in the contract and to compare the offers made to you.
Depending on your profile, you can confidently choose the collective or individual home loan insurance contract that best suits your needs.
For the record, the individual contract is built according to your profile, while a collective contract such as that of mortgage loan insurance offered by Boursorama to its customers is based on the principle of risk pooling between all policyholders.
Stephanne Coignard ([email protected])