How to cancel your loan insurance?
A significant portion of the savings on a loan can be made at the insurance level. How to cancel your loan insurance? Learn more
An important part of savings on a loan comes from insurance when you know that their rate helps to increase the cost of a credit issued. In real estate for example, insurance can represent up to 40% of the total cost of a loan, hence the importance of significantly reducing the influence of this factor.
Often, to compensate for the shortfall on the margin of the nominal rate of a loan, banks increase the rate of insurance that covers credit. To change the insurer when it is mandatory, you must know how to terminate the existing insurance contract.
The loan insurance contract
The loan insurance contract represents an agreement between an insurer that undertakes to provide an insured with a hedge of the risks associated with a loan. In return, the insured person pays variable or fixed bonuses in the form of remuneration for the benefits set out in the contract.
There are contracts concluded directly between a consumer and an insurance company and group insurance contracts entered into between an insurer and an intermediary (bank, company, association, etc.) for the benefit of a beneficiary. The most common example of this type of insurance is that offered by a bank in support of a loan.
The insurance can be subscribed individually or collectively. It can cover one or more risks (multi-risk insurance). We distinguish death, disability, loan guarantee, etc.
Terminate your loan insurance
Today, under certain conditions, it is possible to terminate your insurance contract during or at the end of the term:
- a change of personal situation related to the insurance (divorce …)
- an increase or refusal to reduce premiums
- the sale of the property concerned. In this case, one month notice must be given
- a move after sale or end of lease
- the termination of another related insurance contract
- the arrival of the due date each year or anniversary date. With the Châtel law, the insurer must send the subscriber a notice of expiry in addition to the rates.
In addition, since March 2014, the Hamon law makes it possible to change the loan insurance contract during the first year of the loan. Even if terminating integrated loan insurance is complicated, it is possible to do so provided you find a new contract that has a level of guarantees equivalent or superior to that of the previous insurance.
Start by looking for insurance at least equivalent to that to be terminated. To do this, it is necessary to use comparators or to contact professionals (brokers, insurance agents, lawyers, etc.). The deadline to apply before the end of the term for loans taken after July 26, 2014 is 15 days.
For those who can not avail themselves of the provisions of the Hamon law, there remains the option of Article L. 113-12 of the Insurance Code which provides for the possibility of terminating an insurance contract with an annual maturity following the send two months in advance of a registered letter.
Once a substitute contract is found, provide the evidence to your creditor who is legally obligated to give you a response within a maximum of 10 days. If accepted, the bank provides you with a free endorsement. Otherwise, the refusal must be motivated in writing.
The benefits of a termination of a loan insurance contract
If you are in good health, canceling your group insurance policy in favor of an individual contract can provide you with significant savings. In addition, for a non-smoker, a new contract is able to halve the cost of insurance.
In addition, the annual cancellation of insurance opens the door to the right to be forgotten for some patients who always repay their loans. Those consumers concerned who fulfill the conditions associated with this right could benefit from new insurance contracts without additional costs or restrictions.
The legislative framework has recently evolved, which now facilitates the annual cancellation of borrower insurance as is the case for any other insurance contract.