You plan to subscribe very soon to a mortgage to acquire the property of your dreams? Why not take advantage of it to adopt the outstanding balance insurance? If you have not heard about it yet, know that this insurance known under the abbreviation of the ASRD is intended to protect your family and especially your heirs from the debts you have accumulated in case you come to die. This is a non-mandatory option, which is underwritten at the same time as the mortgage loan. Thus, in the event of the death of the borrower, this insurance reimburses all or part of his mortgage credit to the creditor institution.
What is outstanding balance insurance?
The outstanding balance insurance, by definition, is a banking operation to guarantee the repayment of a mortgage even after the unexpected death of the borrower.
It is adopted at the very signature of a residential credit agreement. In concrete terms, this is a guarantee for all three parties: the loan underwriter, his family, and his bank.
The validity of the insurance naturally ends at the same time as the repayment term of the mortgage credit, if the customer is still alive. This type of insurance is in the same register as life insurance or death insurance, but it is not a legal obligation, although this noble gesture is highly recommended.
In fact, the loan institution with which you have taken out the mortgage loan has no right to require you to subscribe to the DTH. The decision to subscribe to such insurance and the organization that will do so must flow from your personal initiative.
What percentage for my outstanding balance insurance?
Like all types of insurance or banking operations, the outstanding balance insurance is the subject of a prior study on the profile of the beneficiary. In this case, one obviously calculates the loan monthly payments that the individual has contracted, as well as the financial capacities. But above all, we use the life table after assessing its age, physical conditions, as well as its state of health.
What differentiates the ASRD from other insurances is the implementation of more flexible terms, because you can define yourself the percentage you want to allocate to your insurance.
There are 3 formulas to choose from:
- The 50/50 coverage: which is distributed as follows: you honor 50% of the reimbursement of your monthly payments. If you come to die, your loved ones; ie your spouse will make sure to continue paying this amount until the end of the term, and the remaining 50% will be paid by your insurance.
- 100% coverage: this simply means that you are fully insured through full coverage. If you die during the loan contract, the insurance will pay your credit in full, and your loved ones will have nothing to pay.
- Tailor-made coverage: the percentage will be put in place after a negotiation between you and your insurer.
Insurance balance remaining due: single or annual premium
Among the criteria that you can choose for the implementation of your outstanding balance insurance, know that depending on your financial capabilities, you can choose the method of payment of ASRD premiums and its duration.
In general, you can opt for a single premium, that is to say a single amount paid at the beginning of the contract; or several bonuses spread over several years until the end of the repayment term of your credit.