When a bank grants a mortgage, it almost always offers its own insurance policy, known as the "group contract". Nothing obliges you to accept it. Insurance delegation means insuring your loan with another insurer, at signing or later, with a policy tailored to your profile and often far cheaper, without changing anything about the loan itself.
What "delegation" means
Borrower insurance covers the repayment of the loan if you die, lose your independence or can no longer work. The bank's group contract pools all of its customers: young and old, smokers and non-smokers, desk-bound executives and high-risk trades all pay roughly the same rate. An individual, "delegated" policy is priced on your actual situation. For a healthy borrower aged 30 to 45, the gap is frequently a factor of two, sometimes more.
The right to choose your insurer was built in four steps: the Lagarde law (2010) opened it at loan signing, the Hamon law (2014) during the first year, the Bourquin amendment (2018) at each anniversary date, then the Lemoine law (2022) at any time, free of charge and without notice. Today, the only real condition is equivalence of cover.
The rule of the game: equivalence of cover
The bank cannot refuse a delegated policy because it comes from elsewhere. It can refuse it only if it covers less than what the bank requires. To make that comparison objective, the Comité consultatif du secteur financier drew up a list of eighteen criteria (plus four for job loss); each bank selects at most eleven and lists them in the standardised information sheet (FSI) provided with the simulation and then with the loan offer.
These criteria cover very concrete points: duration of cover, cover for high-risk sports and occupations, treatment of back and psychological conditions without hospitalisation, waiting period for work incapacity, cover maintained abroad, lump-sum or indemnity-based compensation. A delegated policy that meets your bank's eleven criteria is deemed equivalent: the bank must accept it.
The cover and the terms you need to know
- DC (death) and PTIA (total and irreversible loss of independence): the core cover, required on every loan.
- ITT (temporary total incapacity for work), IPT and IPP (permanent total or partial disability): required for a primary residence, often optional for a buy-to-let investment.
- Quotité (share insured): the portion of the loan covered by each borrower. For a couple, 100% / 100% fully protects the surviving partner; 50% / 50% costs half as much but leaves half the loan to repay.
- Waiting period: the delay, often 90 days, before the insurer takes over the instalments in the event of work incapacity.
- Lump-sum or indemnity-based: with lump-sum cover the insurer pays the scheduled instalment; with indemnity-based cover it only makes up the loss of income actually recorded, which can sharply reduce payouts for the self-employed and for employees well covered by their employer.
- Initial capital or outstanding capital: a premium calculated on the initial capital is constant; calculated on the outstanding capital, it falls every year. At the same headline rate, the second is cheaper over the full term, but the first is more advantageous if you sell or repay early.
- TAEA (annual effective insurance rate): the indicator that lets you compare two policies whatever their calculation basis.
What it changes, in figures
Take a 35-year-old borrower, non-smoker, executive, borrowing €300,000 over 25 years and insured at 100%. With a group contract at 0.34% of the initial capital, insurance costs €85 a month, i.e. €25,500 over the life of the loan. With a delegated policy at 0.12% of the initial capital, it costs €30 a month, i.e. €9,000. The saving reaches €16,500, with equivalent cover. For a couple each insured at 100%, it doubles.
These rates are given for illustration: the actual price depends on age, health, occupation, smoking and the cover selected. Two lessons hold in every case: the younger you are and the higher the outstanding capital, the greater the gain; and a delegation put in place at signing avoids paying several years of group contract for nothing.
At loan signing: delegation from the outset
This is the ideal moment. As soon as you have an agreement in principle, ask your bank for the FSI: it lists the cover required. Have a delegated quote drawn up on those criteria, then send the bank the membership certificate and the general conditions of the new policy before the loan offer is issued. The bank then incorporates the delegated policy into the offer and may neither change the loan rate nor charge fees in return: the law expressly prohibits it.
One point to watch: some banks make a rate discount conditional on taking their insurance. Always compare the total cost of the loan, insurance included, over the full term. A 0.10% discount on the rate is rarely worth €16,000 of extra insurance.
During the loan: substitution under the Lemoine law
Since 1 September 2022, you can replace your insurance at any time, whatever the date the loan was signed. The procedure takes five steps.
- Gather the documents: the loan offer or its amendment, the FSI, the up-to-date amortisation schedule and the particular conditions of your current insurance.
- Take out the new policy on the basis of the FSI criteria, with an effective date left open or set a few weeks later. The new insurer can handle the cancellation formalities.
- Send the substitution request to the bank, by registered letter or through the online banking area depending on what your contract provides, enclosing the membership certificate and the general conditions of the new policy.
- Wait for the answer: the bank has ten working days. It accepts, or refuses in writing stating precisely which criterion is not met. An unjustified or late refusal is punishable by an administrative fine, and the bank must inform you every year of your right to cancel.
- Receive the amendment: the bank issues, free of charge, an amendment to the loan contract naming the new insurance policy. The old policy ends on the effective date of the new one, with no gap in cover.
Health questionnaire, right to be forgotten, specific profiles
The Lemoine law removed the medical questionnaire when the insured share does not exceed €200,000 per borrower, all mortgages combined, and the loan is repaid before your 60th birthday. Above that, a questionnaire remains possible, but the right to be forgotten means you need not declare a cancer or hepatitis C whose treatment protocol ended more than five years ago, without relapse. For other conditions, the AERAS convention governs the review of files presenting an aggravated health risk.
Delegated insurers are also more precise than group contracts on the situations banks handle poorly: seniors, medical or high-risk occupations, athletes, expatriates and non-residents, large capital amounts. That is often where delegation makes the difference, not only on price.
The mistakes that cost the most
- Comparing headline rates instead of the TAEA and the total cost over the term.
- Reducing the insured share or dropping ITT cover to save a few euros a month, then discovering the gap at the first period off work.
- Choosing an indemnity-based policy when you are self-employed or well covered by your employer, which reduces the payout.
- Cancelling the old policy before the bank's written agreement: cover must be continuous.
- Forgetting that delegation must be redone for every new loan, including a loan buyout or a renegotiation.
What the firm does
We analyse your current policy and your bank's FSI, we put several delegated insurers in competition with at least equivalent cover, we quantify the real saving over the remaining term, then we prepare the substitution request and follow the bank's answer through to the amendment. The new policy takes over with no gap in cover and without touching your loan. At signing as well as during the loan, the review is free and without obligation.
- Delegation is a right: at signing (Lagarde law) and at any time afterwards (Lemoine law).
- Only condition: equivalence of cover, measured against the eleven criteria of your bank's FSI.
- The bank answers within ten working days and may neither change the rate nor charge fees.
- Compare on the TAEA and on total cost; never lower the cover to lower the price.
- Savings frequently run to several thousand euros, all the greater when the loan is young.