In addition to the costs associated with the credit, several additional expenses are added to the expenses, as for example the mortgage loan insurance. This insurance will be requested by the lending institution to guarantee the repayment of the principal in case of default. The borrower is free to choose his mortgage loan insurance if it presents a guarantee equivalent to that proposed by the lending institution.
There are several types of home loan insurance . The “death-disability” guarantee covers the risk of death and total and permanent disability. It is present in all insurance contracts. It may include a “temporary incapacity for work” guarantee, which will come into effect during the borrower’s disability period, covering his monthly payments.
To assess the potential risk of default, the insurance will ask at the time of the subscription to submit to a questionnaire of health. This questionnaire will determine the conditions of the mortgage loan insurance contract and will condition the implementation of the guarantees.
In case of false declaration or omissions, the insurer may refuse the compensation. Indeed, the questionnaire must be able to correctly assess the risk of insolvency. In this case, the mortgage loan insurance contract may be canceled. If the insured has made an error, which does not amount to fraud, the contract may be maintained. This requires that this error be identified before a disaster occurs. If the error is detected after the incident, the compensation due to the insured is reduced, in the proportions corresponding to the questionnaire correctly provided.
Finally, you should know that the mortgage loan insurance applies only after a period of deductible, whose duration can vary from three to six months; the assumption of responsibility of the insured will begin at the end of this one.