Mortgage protection: you do not have to take it from your bank
The bank requires the cover. It cannot dictate the insurer — and over twenty years the gap runs into thousands.
When granting a mortgage, every Luxembourg bank asks for outstanding balance cover. It repays the remaining capital if the borrower dies, so the family keeps the property without taking on the debt. The requirement is fair. What is less fair is the impression that the contract has to be taken out with the lender.
The policy offered at the counter is not the only one
A bank naturally offers its own group's product, presented alongside the loan offer — at the exact moment the borrower mainly wants the file to move forward. That is the worst moment to compare, which is precisely why comparing beforehand is worth the effort.
What moves the premium
- Age at the time of signing: by far the heaviest factor.
- Smoker or non-smoker.
- The share insured on each life: two borrowers at 50% do not cost the same as two at 100%.
- The shape of the capital: decreasing with the amortisation, or level.
- How you pay: a single premium up front, or regular premiums.
Two things to check before signing
First, the share. Covering each borrower at 100% doubles both the capital and the premium, but leaves the survivor with no debt at all. At 50% each, half the loan still has to be carried alone. The right choice depends on both incomes, not on a rule of thumb.
Second, the medical questionnaire. It governs acceptance and any loading. Answering it accurately protects your family: an inaccurate statement can be raised precisely when the cover is supposed to pay.
Information article written by iSOLUTIONS S.à r.l. It does not replace advice from your agent and creates no contractual commitment. The general and particular conditions of your contract are what count.
