If you take out a balance insurance policy for your home loan, your surviving dependents will not get into the financial problems upon your death. The insurer will then continue to pay your loan. You can choose from a balance insurance with guaranteed rate or experience rate. We explain the difference between the two rates in more detail below. That way you can determine yourself which rate you prefer.
Debt balance insurance with guaranteed rate: higher but fixed premium
In this case you will receive a guaranteed fixed rate for the entire duration of your contract . Thanks to this rate, you always pay the same premium for your outstanding balance insurance. Whether you have to pay premiums for 10 years or 20 years, the amount remains unchanged. Although the guaranteed rate is slightly higher than the experience rate, you can be sure that your premium will never rise. In other words, with this fixed rate you know where you stand.
Debt balance insurance with experience rate: lower but variable premium
The experience rate is lower than the guaranteed rate and is also the most chosen . What does this rate entail? You pay the same premium during the first 3 years of your contract. After this period it is possible that your premium will fall or rise.
When does your premium rise or fall?
A possible decrease or increase depends on the current mortality statistics in Belgium. If the probabilities of death increase, the premium increases and if they decrease, they fall. The legislation or competent supervisory authority can oblige the insurer to adjust the rate if necessary.
However, the chance that a premium increase will actually occur is unlikely and has never even occurred until 2018. After all, life expectancy in our country is only getting higher and general public health is also improving year after year. That is why most people still opt for a debt balance insurance with an experience rate.
Do you have additional questions about these two rates?
Then contact us without obligation. We are happy to answer all your questions and help you make the best choice for your specific situation.