When you apply for a loan, the bank may require that a Remaining Due Balance Insurance be set up. This policy is a type of life insurance or death insurance that covers a specified amount of the mortgage in Luxembourg. It protects the partner, the family or the bank in case of death before the loan is repaid. The insured capital is degressive, i.e. it follows the repayment curve of the loan.
Who can take out Credit Protection Insurance?
The policyholder of the Remaining Due Balance Insurance can choose to insure themselves and/or a second policyholder. The distribution between the two policyholders can be specified .
What is covered by a Credit Protection Insurance?
This insurance covers the insured in case of death.
Additional guarantees can be taken out and to extendthe cover to total or partial disability.
Payment of the premium and tax benefits in Luxembourg
The payment of the premium can be made in two ways:
- A single premium
- Yearly premiums spread over 2/3 of the duration of the contract
In Luxembourg, it is possible to benefit from a very advantageous tax deduction and OCA will advise on how to best optimise your situation.
Is Credit Protection Insurance compulsory?
While not compulsory, but it does provide security:
- To your relatives: in the worst-case scenario , a Remaining Due Balance Insurance guarantees that the borrowed amount will be repaid, protecting the beneficiaries
- To the bank: when a mortgage is granted, the bank may require Remaining Due Balance Insurance as an additional guarantee for the term of the loan
Which criteria are used to calculate the Credit Protection Insurance?
Several factors are considered when calculating the premium:
- The amount, duration and rate of the bank loan
- Age
- The risk of death based on a medical questionnaire and/or a medical examination
How do I take out Credit Protection Insurance?
To obtain your mortgage from your bank, Remaining Due Balance Insurance is often a precondition of the loan agreement. The law does not require you to take out this insurance with the financial institution that grants you your credit, allowing a free choice of insurance provider.
As an accredited broker, OCA offers comparisons with several insurance companies and advises you on the process. Do not hesitate to request this service or obtain more information.
For more information on the product, click here.
