Securing a home loan: What is the death, disability or disability guarantee?

Verified 23 November 2020 - Directorate for Legal and Administrative Information (Prime Minister)

In order to grant a mortgage, the bank may require the borrower to take out borrower insurance. This insurance guarantees repayment of the loan in the event of death, loss of autonomy, disability, temporary incapacity for work. The insurance contract shall specify the conditions for the implementation of such guarantees.

The death guarantee is always present in a borrower insurance contract.

It shall take place in the event of the death of the borrower before a certain age limit. The insurer pays the bank the principal outstanding on the day of death, according to the insured amount.

Depending on the insurance contract, compensation may take place as soon as the contract is signed or after a waiting period.

The insurance contract may provide for situations where compensation is excluded (disclaimers of guarantee). For example: suicide, engaging in a dangerous sport.

The guarantee total or irreversible loss of autonomy (PTIA) intervenes when the borrower is totally and permanently unable to have any professional activity. The borrower must also be under an absolute and presumed definitive obligation to use the assistance of a third party to wash, dress, feed and move.

Depending on the insurance contract, PTIA's risk is covered up to a certain age limit, or throughout the duration of the loan. In most cases, the borrower must also receive a social security disability pension.

The insurer repays the monthly installments of the loan, depending on the amount insured or the loss of income.

Total permanent disability (TPI)

The guarantee total permanent invalidity (TPI) concerns incompetence permanent to engage in an occupational activity, following an accident or illness, and after consolidation the state of health. The insurance contract shall fix the rate at which it is to be considered as total.

Compensation is paid after the borrower's disability rate has been assessed by a doctor designated by the insurer and according to the medical scale mentioned in the insurance contract

According to the insurance contract, the IPT guarantee is valid when the borrower is unable to carry out his professional activity or any professional activity.

According to the contract:

  • The amount of compensation paid depends on the loss of income or the monthly payment of the loan.
  • The allowance shall be paid from 1er day of IPTS or after a period of frankness.
  • Compensation may or may not be excluded in the case of illness due to alcohol or drugs, dangerous sports, intentional injuries...
  • The guarantee only applies until a certain age limit.

Partial permanent disability (PPI)

The guarantee partial permanent invalidity (PPI) concerns incompetence permanent to engage in an occupational activity, following an accident or illness, and after consolidation the health of the borrower. The insurance contract shall fix the rate at which the invalidity is to be regarded as partial.

Compensation is paid after the rate of invalidity has been assessed by a doctor designated by the insurer and according to the medical scale mentioned in the insurance contract.

FYI  

the IPP guarantee can only be purchased in addition to an IPT guarantee and is not offered by all insurance contracts.

According to the insurance contract, the PPI guarantee is valid when the borrower is unable to carry out his professional activity or any professional activity.

According to the contract:

  • The amount of compensation paid depends on the loss of income or the monthly payment of the loan.
  • The allowance shall be paid from 1er IP day, or after a delay of frankness.
  • Compensation may or may not be excluded in the case of illness due to alcohol or drugs, dangerous sports, intentional injuries.
  • The guarantee only applies until a certain age limit.

The guarantee temporary incapacity for work concerns incompetence temporary to engage in an occupational activity, following an accident or disease giving rise to a work stoppage. Disability must be total.

Depending on the contract, this may be the inability to perform the activity performed at the time of the accident or illness or any professional activity.

Please note

in the event of resumption (even partial) of activity, insurance coverage shall cease, unless a clause of the contract provides for coverage in the case of a therapeutic half-time.

Insurance contracts often provide for an age limit and a frankness during which the insurer does not pay compensation.

Warning  

contracts often include exclusions (e.g. voluntary injuries to the insured, dangerous sports, alcohol or drug-related illness).

The insurer pays the monthly loan payments under the conditions specified in the contract (depending on the insured amount or the loss of income).