Cover that repays the lender on the borrower's death, disability or work incapacity, long sold as a group product by the lending bank itself.
Credit life and disability insurance repays a loan on the borrower's death, total and irreversible loss of autonomy, disability or work incapacity, the benefit going to the lender up to the insured share. Its economic peculiarity lies in distribution: it was long sold by the lending bank as a group contract, an arrangement in which the seller has no interest in lowering the price since it collects the margin, and where the borrower, focused on the loan rate, does not shop around. The French legislature dismantled that position in successive steps, first opening free choice of insurer at inception, then substitution during the first year, then at each annual renewal, and finally at any time. The replacement cover must be equivalent, a test the lender applies against a list of criteria set by the regulator, which limits arbitrary refusals. The problem solved is protection of the household as much as of the lender, since a death should not end in the loss of the home.
France's Lagarde Act of July 1, 2010 opened the choice of a third party insurer, the Hamon Act of 2014 allowed substitution within twelve months, the Bourquin Act of 2017 annual cancellation, and the Lemoine Act of February 28, 2022 cancellation at any time, applying to new contracts from June 1, 2022 and to all contracts in force from September 1, 2022. The country's financial sector advisory committee has long reported a claims to premium ratio around 30%, far below other lines.
assurance de prêt, ADE