According to Article 52 of the Finance Bill 2019, the “special tax on insurance agreements”, known as TSCA, will extend to all the guarantees of the mortgage insurance contract. This is a measure which should result in an average additional cost of 44 euros per year for the insured’s contributions.
A 9% insurance tax covering the entire contract
The government has taken the decision to put an end to the exemption from tax insurance loan from the death guarantee of home loan insurance contracts. This special tax of 9% on credit insurance contracts, which previously only covered the guarantees of incapacity for work, unemployment, and partial disability, will, from 2019, be applied to the entire contract of insurance of the borrowers, and will, therefore, receive the full amount of their insurance contributions.
By increasing taxation, there will be an additional cost for borrowers. According to the different profiles of insured persons, and if the banks and insurance companies pass on the tax increase in full, then an average increase of 4.5% in the amount of the insurance contributions would be expected. which represents a few euros a month. However, in the case where the insured exercises a risky profession, practices a dangerous sport or presents an aggravated health risk, this additional cost could increase.
According to the government, this measure aims to “make the pricing of the contract more intelligible for the insured and to avoid the possibility of tax optimization in the breakdown of the overall premium between the different guarantees”.
We recommend that you do not wait until 2019 to renegotiate your home loan insurance. In fact, you will avoid this tax credit increase.
The Bourquin law
The Bourquin law allows the insured person to cancel his credit insurance annually, which may enable him to reduce his cost or to obtain a contract more adapted to his current situation. This amendment came in addition to the Hamon law, which allows the borrower to change insurance during the first year, from the date of signature of the mortgage offer. With the Bourquin law, this change of contract is possible on each anniversary date.
To change your loan insurance with the Bourquin law, it is necessary to follow these two steps:
1 – Take note of the anniversary date of your loan insurance contract and withdraw two months in order to properly determine the notice period that must be respected.
2 – Send your letter of request for termination, and change of contract, by registered mail with acknowledgment of receipt. Remember that the credit institution has 10 working days from the receipt of your new insurance contract to inform you in writing of its refusal or acceptance. In case of non-compliance with this deadline, he is liable to a fine of 3,000 euros, according to Article L.312-32-1 of the Consumer Code.
Good to know: if the lending institution refuses this request for a change of insurance, the new contract that you have subscribed will be canceled without any fees, and the monthly payments already collected will be returned to you.