Loan insurance: what is disability?

In addition to covering the borrower in the event of death, home loan insurance also applies in the event of disability. However, depending on the contract taken out, the definition of the term invalidity may vary, since the latter can either be permanent total (IPT) or permanent partial (IPP). Definition, differences in guarantees. We tell you more about this disability guarantee mentioned in each mortgage loan insurance contract.

The disability guarantee of the loan insurance contract

The disability guarantee of the loan insurance contract

When a person takes out a mortgage and the borrower insurance that goes hand in hand, he is automatically covered in the event of disability, thanks to the guarantee of the same name present in any mortgage loan insurance contract. However, two types of coverage exist: total permanent disability ( IPT) and partial permanent disability (PPI). Each corresponds to a level of disability determined by the doctor following the accident or illness in question:

  • At less than 33% disability, the borrower is not covered;
  • Between 33 and 65% of disability, the borrower is covered in the event of taking out a partial disability guarantee (PPI);
  • From 66%, the borrower is covered under total disability (IPT).

An example: Mr. Lender, a borrower, has a serious car accident which damages his spinal cord. His surgeon is formal, he will never find the use of his legs. After visiting the doctor, he says that he is 64% disabled. If Mr. Lender’s borrower insurance contract only includes a total permanent disability guarantee, it is not covered; if he does include a partial permanent disability guarantee, he may be compensated.

How to extend its guarantees?

Changing loan insurance to obtain better coverage is possible: in fact, the Hamon law allows each borrower to change the contract during the first year of the loan, and the Bourquin law allows each borrower to change the contract each time anniversary date of the signature of the loan offer (or the insurance contract), in order to extend its guarantees or reduce the cost of its insurance. To put the different organizations in competition, the borrower can use a loan insurance broker.