The outstanding balance insurance: its usefulness and its advantages
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APRIL 09, 2019
In Luxembourg, individuals seeking to buy an apartment or a house to live in it are confronted with the inflation of real estate prices, both in the new and the old. Then, once found the housing of their dreams, they ask themselves the question of the financing of the purchase; the answer often goes through a bank loan. It is only then that one generally hears about insurance balance remaining due.
Insurance balance remaining, SRD, insurance loan ... What is it?
In Luxembourg, the insurance Balance remaining due, subscribed during the acquisition of a property, covers the reimbursement of the part still dependent on the insured , in the case of a death or total and permanent disability during the duration of the contract. The sum insured thus decreases according to the amortization table.
With the payment of an insurance premium, paid once or smoothed over time, the borrower relieves his relatives of a heavy load to bear in the event of an accident in life, since it will then be the company to pay the outstanding balance to the bank that granted the loan.
By definition, the vast majority of SRD insurance is underwritten to guarantee the repayment of a mortgage credit , but the formula also exists to repay large consumer credits, such as when buying a car.
An outstanding balance insurance, how much does it cost?
Everything depends on several elements: the amount of the loan to be insured, the rate of interest, the duration, the age of the person to be insured, the presence or not of a second person to be insured, the extent of the guarantees (death and total disability and permanent) and the state of health of the person.
As we can see, the remaining balance insurance is not an easy task; moreover, to make the competition compete and to ask for offers from several Luxembourg insurance companies . Indeed, your bank can not refuse that you choose the company yourself, as long as its conditions of coverage are met.
The tax advantage related to the insurance balance remaining due
Under section 111LIR, a taxpayer filing a tax return can reduce the taxable income base by deducting the amount paid for his DTH insurance.
If the premium is paid in one go (single premium), the maximum deductible amount will depend on the age of the taxpayer and the number of people in his household. If the premium is paid in several installments, the maximum deductible amount depends solely on the number of people in his household.
Find out everything you need to know about outstanding balance insurance on baloise.lu/srd
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