Georges Fernandes, area sales manager of the insurer Foyer Group:
“It is very important to take your time because this type of insurance can give you significant tax savings…”
Photo: Foyer Group
The decision has been made to buy a home in Luxembourg. You have been to the bank and have an idea of your spending power, so what’s next?
The temptation now is to start making viewing appointments, but Georges Fernandes, area sales manager of the Foyer Group, an insurance firm, suggests another moment of the “mature reflection” referred to in our article earlier this week.
We understand that you may be keen to get on with the fun part of viewing properties and imagining your future home, and it can be very easy to get carried away at this stage, especially if you are a first-time buyer. But think about this. This is the biggest investment most of us will ever make. Doesn’t it deserve more consideration than the time it would take to buy a pair of shoes?
“Contact your insurance agent as soon as you start thinking about buying a house. Your agent will become a key partner in assisting you through the preliminary stages of taking out a mortgage, while making his experience available to you to outline all of the possible solutions,” Fernandes advised.
In addition to purely insurance solutions, your insurer can also guide you in financing your property by advising on tax deductible solutions such as a home savings plan. For the specific purposes of buying a home, Fernandes described the types of insurance a buyer will need:
“For real estate purchased via a loan, an insurance policy that covers the balance of the loan is highly recommended in order to protect one’s family. This insurance covers the repayment of the balance of the loan in the case of the death of the insured before it is fully repaid [this type of policy usually requires a medical check-up]. In this context, it is also very important to insure the risk of permanent total occupational disability in addition to the risk of death.”
This is admittedly not as exciting as choosing home furnishings and bathroom colours, but it is essential. “Moreover,” Fernandes added, “it is important to insure the property with a comprehensive homeowner’s policy (fire, storm, water damage, broken glass, theft, natural disasters, etc.) that covers its contents.”
“Nowadays, in an increasingly digital world, complementary options such as the coverage of audio-visual equipment damaged outside the insured premises, are insurable with coverage extensions. Last but not least, it is also necessary to take out a private liability policy that will cover property damage or bodily injury caused to any third party by the building or persons residing there.”
As for the cost of such policies, it is difficult to give exact figures in this article as it depends of several factors. Fernandes explained:
“Since they are often tailor-made policies, it is almost impossible to give an indication of the premiums since they depend on specific factors that revolve around the risks to be insured.”
For example, the cost of a loan balance policy mainly depends on 3 factors: the amount to be insured, the term and the interest rate of the loan. The pricing of homeowner’s insurance depends on the property’s square footage, the building’s finishing (standard, standard with significant improvements or luxury finishing), and the value of the content to be insured.
“It is very important to take your time because this type of insurance can give you significant tax savings as the Luxembourg tax code allows you to deduct a considerable amount as special expenses on the condition that the policy is paid as a single premium,” Fernandes stressed.
The insurance rep argued that:
“Since the single deductible premium varies depending on the policyholder’s age and the composition of his tax household, it is strongly recommended that you call on a professional agent who can advise you and help you implement the solution that is most appropriate to your needs.”