If French law does not require you to take out insurance when you take out a loan, the reality is very different. For consumer loans, where the financial stakes are much lower, insurance is in principle optional, but some financial institutions strongly recommend it to grant their loan. However, these insurances are not always useful and increase the cost of credit. At Cofinoga, for example, the insurance taken out as part of a store card amounts to 0.5% per month.
As far as real estate credit is concerned, no financial institution grants a loan without death and disability insurance. The bank has the obligation to inform the borrower about the insurance and the guaranteed risks and, if it is compulsory, its price must be included in the calculation of the overall effective rate (TEG) of the credit. This insurance must be annexed to the contract, the guaranteed risks must be listed and the terms and conditions for bringing the insurance into play specified.
Insurance contracts often provide waiting periods after subscription and periods of franchise after the occurrence of the event. Certain guarantees cease with the age limit. Similarly, there are a number of cases that are excluded from insurance contracts such as suicide, war risk…
For “people presenting an aggravated health risk or with disabilities”, the Belorgey agreement was signed in 2001 between the State, patient and consumer associations, insurers and credit organizations. It aims to improve their access to borrowing (“Le Monde Argent” dated October 26-27).
In most cases, the insurance is offered at the same time as the loan in the form of a “group insurance”, a contract negotiated beforehand between the bank and an insurer. The borrower can try to take out insurance outside, hoping to find a better price. He will then have to proceed with a “delegation of insurance”, provided that he obtains the agreement of his bank.