Job Loss Insurance for a Real Estate Loan
A loss of employment loan insurance is a guarantee covering the monthly payments of a loan in case of loss of employment, following a dismissal. This insurance guarantees, under the conditions and the limits of the contract, the assumption of a part of the monthly installments of the loan (real estate or consumption).
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In case of dismissal, and without deductible, the insurance company pays you a compensation complementary to that of the employment center, and not taxable, allowing you to pay your installments. The subscription of a loan loss insurance employment is not obligatory, but your lending financial institution can require it, under pain of refusing the requested mortgage loan. The request for a job loss insurance is explained by the upsurge in unemployment in recent months. As a result, home loans are increasingly accompanied by job loss insurance or unemployment insurance. The loss of employment guarantee is a contract concluded between the lender and the insurer and which benefits the member.
The job loss insurance explained
Employment loss loan insurance is an optional guarantee of loan insurance. It allows the assumption of repayment of monthly loan payments by the insurer in case of loss of employment of the insured followed by a period of unemployment. This optional guarantee is only for a certain type of insured profiles.
Loan loss insurance is a loan guarantee that is often recommended and sometimes requested from the borrower by some lending institutions to grant a loan. Indeed, although optional, it can be increasingly requested by banks because the current economic climate is uncertain.
How does the job loss guarantee work?
The job loss guarantee, also called unemployment insurance, replaces the borrower to repay his monthly payments in case of unemployment. It therefore covers the borrower during his period of inactivity and ensures the bank to be well repaid. The terms of the contract of an unemployment insurance.
Conditions of subscription of the loss of employment guarantee
The subscription of the job loss guarantee is not accessible to everyone. To access it, the borrower must work under an Undated Contract and have a certain seniority with his current employer (from 6 to 12 months). It is also necessary to be attached to an unemployment insurance scheme and therefore be entitled to receive unemployment benefits following a loss of employment. Finally, it is a question of an age limit of subscription generally varying from 55 to 65 years according to the insurers.
The duration of coverage of the job loss guarantee
In most contracts, the duration of coverage of the loss of employment guarantee varies from 1 to 4 years and may be tacitly renewable at the end of this period. If the insured reaches the age limit specified in the contract or when he / she retires, unemployment insurance ends.
The waiting period
The waiting period is a period that begins on the date of subscription of the unemployment insurance contract, during which the insurer does not pay any compensation in case of loss of employment. The waiting period usually ranges from 6 to 12 months.
The franchise period
The grace period corresponds to the time that the insured must wait, from the date of loss of employment or the date of receipt of the first unemployment benefit, before receiving compensation from the insurer. This is a period that usually varies from 3 to 6 months.
The repayment terms
Depending on the type of compensation, the insurer can either pay compensation ranging from 50 to 100% of the amount of the monthly payments, or postpone the repayment dates at the end of the loan. It is preferable to opt for the first solution because in the event of postponement of the deadlines, the duration of the credit lengthens…
The cost of the job loss guarantee
The cost of the loss of employment guarantee is calculated either on the amount of capital borrowed (varies from 0.3 to 0.7% of the capital borrowed), or on the amount of monthly loan payments (varies from 1 to 7% of the amount of monthly payments).