Mortgage insurance: an average annual additional cost of 44 euros from 2019

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Mortgage insurance: an average annual additional cost of 44 euros from 2019

Article 52 of the Finance Bill for 2019 will extend the special tax on insurance agreements, the TSCA, to all guarantees of loan insurance contracts. This measure should generate an average annual additional cost of 44 euros on insurance contributions, according to the government.

As we announced last September, the government has decided to put an end to the tax exemption that has been used to date on the death guarantee of borrower insurance contracts. An exemption that would be "not legally or economically justified", according to the preliminary assessment of Article 52 of the 2019 Finance Bill. Thus, the TSCA, the 9% special tax on insurance contracts Loan insurance, which until now only covered guarantees covering incapacity for work, loss of employment and a part of the disability, will soon receive all the premiums paid by the insured. The measure will apply to all new contracts taken on or after 1 January 2019.

And this increase in taxation will obviously result in additional costs for the borrower. As early as September, Capital had calculated this extra cost, based on different profiles of insureds, in the event that the banks and insurance companies would pass on the tax increase in full. Result: a potential increase of approximately 4.5% in the amount of premiums. Or a few more euros per month. But, according to our simulations, this additional cost could increase if the borrower had a risky occupation or if he presented a profile with an aggravated health risk.

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Our calculations have just been confirmed by the government, which has also measured the potential impact of the TSCA death benefit guarantee. Its results are comparable to our simulations, since it assesses an average increase of 44 euros on the annual insurance contributions. For a car loan of 15,000 euros over 72 months, for example, the annual supplement would be 12 euros. For a real estate loan of 500,000 euros over 25 years: 204 euros per year. According to the Government, the measure will "make the pricing of his contract more intelligible to the insured and avoid opportunities for tax optimization in the breakdown of the overall premium between the different guarantees". But we can only advise you to renegotiate your contract before the end of the year, to avoid having to undergo this increase.

Report of the Finance Committee of the National Assembly