As part of the mortgage the bank requires two insurance policies: life insurance for every borrower, and building insurance for the property. Over 20–30 years this adds up to tens of thousands of shekels, so it is worth comparing.
Mortgage life insurance
If a borrower dies, the insurance covers the mortgage balance. The premium depends on age, smoking, health, the amount and the term. The insured amount usually goes down over time together with the loan balance.
Building insurance
It insures the property against damage such as fire, earthquake and water damage. The amount is set according to the cost of rebuilding, not according to the market price of the apartment.
The right to choose
You do not have to insure through the bank. You may buy the policies from any insurance company, provided the policy meets the bank's requirements and is pledged in its favor. The differences between offers can be significant.
What to check when comparing
- The price over the whole period – not only in the first year.
- Fixed or variable premium – a premium updated by age may become much more expensive.
- Building insurance coverage – earthquake, water damage, third party.
- Deductible.
Do not give it up
Do not give up life insurance to save money. It protects your spouse and children from a debt that could bring the family down.