everything that has changed

Changing borrower insurance at any time and free of charge is now possible. The Lemoine law has in fact simplified the possibility of terminating one’s contract to turn to a more attractive offer without having to wait for the anniversary date. It also removes the medical questionnaire in many situations. Update on everything that has changed.

As part of a home loan, the cost of borrower insurance is far from negligible. This insurance, which is not compulsory, is generally imposed by the banks, because it makes it possible to guarantee a mortgage in the event of failure to repay the installments due to physical incapacity, loss of employment or the death of the borrower. In the absence of insurance, a lending institution refuses, in principle, to grant a mortgage.

The law of February 28, 2022, called the “Lemoine law”, reforms this insurance by putting in place new provisions “for fairer, simpler and more transparent access to the borrower insurance market”.

Possibility of changing insurance at any time, simplified termination, better information for borrowers, but also removal of the medical questionnaire… Here is everything you need to know about these new provisions.

The possibility of changing insurance at any time

The law of February 28, 2022 allows individuals who have taken out a mortgage for residential or mixed use (residential and professional) to change their insurance contract from:

  • June 1, 2022 for loan offers signed from that date;
  • September 1, 2022 for loan offers signed before June 1, 2022.

Cancellation is now possible any time of the year, for the duration of the loanwithout having to wait for an anniversary date, and without deadline constraints or penalties.

The only requirement imposed by law when changing insurance is that the new insurance contract must respect the minimum guarantees (death and disability for example) required by the lending bank.

Borrower insurance: simplified termination

The law of February 28, 2022 also simplifies the procedures. To notify the insurance company of its wish to terminate, the borrower may do so by letter or any other durable medium, by declaration made at the head office or at the insurer’s representative, by extrajudicial act, by the same method of communication usually used with the organization or by any other means provided for in the contract…

He must also inform the lender, and send a request for insurance substitution to his bank.

The termination takes effect 10 days after receipt by the insurer of the notification of acceptance by the lender. The latter must, for his part, modify the loan contract by an amendment and specify the new annual percentage rate of charge (APR) within 10 working days of receipt of the substitution request.

On his side, the lender is obliged to accept the new contract, unless it does not present a level of guarantee equivalent to the initial contract. If he objects, he must then indicate the reasons for the refusal, that is to say, specify what information and guarantees are missing in the new contract.

The reinforced duty to inform

The information notice listing the guaranteed risks and the terms and conditions for bringing the borrower’s insurance into play, attached to the loan agreement, must henceforth clearly indicate the possibility for the borrower to terminate the insurance contract at any timefrom the signing of the loan offer.

In addition, the insurer must remind the borrower each year of the existence of this right to terminateand specify the procedures and deadlines for notification and information to be respected.

Failure to comply with this duty to inform, offenders incur an administrative fine of a maximum amount of €15,000.

The end of the medical questionnaire

Before the Lemoine law, the health questionnaire was systematic and allowed banks and insurers to apply additional premiums, if they considered that the borrower’s state of health was at “risk”.

Since September 1, 2022, the medical questionnaire has been abolished for all home loans below €200,000 per person (therefore €400,000 for a couple) and if the date of end of the loan is planned before the insured personʼs 60th birthday.

The questionnaire remains in force in the opposite case, if the loan is higher than 200,000 € therefore, or if its term occurs after the sixtieth birthday of the borrower.

The right to be forgotten: extension of the deadline

The right to be forgotten concerns people who have had a serious illness (such as cancer), in order to prevent them from being liable for an additional premium, or even a refusal of insurance.

The period of the right to be forgotten thus goes from 10 to 5 years from the end of the therapeutic protocol.

From now on, a borrower who has been the victim of an illness will no longer have to specify it in the medical questionnaire if his therapeutic protocol has been completed for more than 5 years, and this regardless of the age at which the illness was diagnosed.

Please note, however, that the right to be forgotten does not apply to all pathologies.

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