Home loans: how does job loss insurance work?

The lending agency (for example, the bank) with which you sign the mortgage cannot require you to take out an insurance contract covering the loss of employment.

Generally, to sign an insurance contract covering the loss of employment, you must be a employee in CDI: titleContent which is not on probation or notice of termination. You must also be under 50.

Generally, the contribution requested is either a share of the total amount borrowed or the capital remaining due, i.e. part of the monthly payment.

But the contribution requested also varies according to the amount of your salary, your age, your occupation and your sector of activity (public building and works, trade, tourism...) at the time of signing the loan. The premium is higher because your salary is high, you are older, and your profession and sector are considered to be at risk.

Usually, unemployment insurance covers dismissal, on the condition that it entitles you to unemployment benefits.

As a result:

• the resignation, the conventional rupture, the termination for misconduct may be excluded,
• Compensation is only paid to you if you can collect unemployment benefit.

The insurance contract may, in particular, provide that compensation for loss of employment shall cover:

• Or the whole of the monthly payment of your loan
• That is only part of the monthly payment. For example, the difference between the amount of the monthly loan and the amount of your unemployment benefit.

The insurance contract may also provide for:

• One maximum monthly allowance (the compensation paid to you each month does not exceed a maximum amount or a maximum part of the monthly payment)
• One maximum duration of compensation (the allowance is paid to you for a maximum number of consecutive months)
• One maximum frequency of compensation (the number of times compensation is triggered is capped)
• One waiting period (no compensation is paid to you within the first few months after signing the insurance contract)
• One deductible period (no compensation is paid to you immediately after you lose your job)
• One age limit beyond which you are no longer covered by employment loss insurance.

You must inform your insurer that you have lost unintentionally your job.

Generally, you must provide the following supporting documents:

• Employment contract
• Letter of dismissal
• Certificate for France Travail (formerly Job center).

The complete list of documents to be provided to your insurer is indicated in your insurance contract.

At the same time, you must register at France Travail in order to receive your unemployment benefits and in doing so, receive the compensation provided by your employment loss insurance contract.