Home loan insurance: burn-out, a factor of exclusion

According to Santé Publique France, 30,000 people are affected by burn-out in France. This psychological disorder, also known as work-related exhaustion syndrome, is not recognized as an occupational disease, and can also be a disqualifying factor when taking out mortgage insurance. So beware when taking out a mortgage!

Burn-out: a non-objectifiable illness

Insurance companies consider burn-out to be a so-called non-objectifiable illness, i.e. one that cannot be objectively identified by a health professional, cannot be quantified, and whose symptoms differ from one person to another.

These non-objectifiable illnesses include everything from psychological disorders to back pain and chronic fatigue. And all of them are considered by insurers as risk factors: these pathologies are likely to lead to long-term work stoppages, with sometimes heavy financial consequences.

Applicants for mortgages are required to fill in a form for their mortgage insurer, listing the illnesses they have suffered from in the course of their lives. In accordance with Article L113-2 of the French Insurance Code, the applicant is required to "provide accurate answers to the questions asked by the insurer, in particular in the risk declaration form used by the insurer at the time of conclusion of the contract, on the circumstances that are likely to lead the insurer to assess the risks it assumes".

In the event of misrepresentation or deliberate omission of a burn-out episode, for example, the insurance contract may be cancelled by the insurer, or the premium recalculated. However, if the loan is no longer insured, the bank is entitled to demand early repayment on the grounds of serious breach of contractual obligations.

An alternative solution: paying an additional premium

When burn-out, and in general non-objectifiable illnesses, are considered exclusions from cover under a loan insurance policy, the borrower has an alternative: paying an additional premium.

This is apercentage-based surcharge, specific to each insurance company. Each month, year or quarter, for example, the policyholder pays 30% more to be covered for a risk not initially covered by the insurance.

In this case, it is advisable for the borrower to take advantage of the competition and contact several organizations to compare exclusion criteria and excess premium rates.