Outstanding balance insurance
When you tale up a loan to purchase your home, the financial institution will require you to take up an outstanding balance insurance.
This insurance covers your loan against the outstanding balance in the event of death.
Your spouse or heirs will become the owners of the building, without having to pay the remaining monthly instalments (capital and interests) in your place.
It also represents a security for the family (spouse, children) since, in the event of a death, the repayment of the home loan is covered by the insurance (fully or partly, depending on the terms and conditions chosen).
Whether you are borrowing alone or jointly with another person, your lending institution will require the total loan amount to be insured, i.e. 100% of the capital borrowed.
You can also divide the capital between the two persons, taking into account that:
- in the event of death of one of the two borrowers, only the latter’s debt will be written off and the surviving borrower will have to continue to pay his share of the loan.
- it can be paid as a single premium (included in the loan amount and tax deductible, therefore advantageous) or through annual premiums.
- the capital insured decreases annually based on the amounts already repaid.
- the insurance amount is mainly a function of the amount borrowed and the age of the insured.
Tax benefits in the case of a single premium
The single premium of the outstanding balance insurance is tax deductible as a special expense.
Tax deductible amount of the outstanding balance insurance:
|Taxpayer||Increased ceiling (up to 30 years)||Over-increased ceiling (31 to 49 years, slice multiplied by the number of years)||Over-increased ceiling (50 years and more)|
|with 1 child||3,672 €||294 €||9,547 €|
|with 2 children||4,344 €||347 €||11,294 €|
|with 3 children||5,016 €||401 €||13,041 €|
|with 4 children||5,688 €||455 €||14,788 €|
If you have already taken a life-insurance?
The outstanding balance insurance aims at guaranteeing the repayment of the home loan in the event of premature death of the policyholder(s).
If you already have taken a life-insurance, this may be amended into an outstanding balance insurance (under certain conditions).
It is therefore recommended that you contact your insurer to jointly look into whether, and under what conditions, your life-insurance could be converted into an outstanding balance insurance.