Mortgage Insurance in Israel

This mandatory insurance when acquiring a property consists of two types of insurance designed to protect the bank.

The first component of the mortgage insurance is in fact life insurance that guarantees the bank will receive the full remaining amount owed in the event of the death of one or both borrowers.

The second component of this insurance concerns the structure of the property and serves to preserve the value of the asset in the event of significant damage likely to cause a loss of value, such as a fire, flood, earthquake, electrical short circuit causing consequential damage, or major plumbing problems, so as to restore the property to its original condition or, where applicable, to receive from the insurance company an amount equivalent to the loss.

For optimal insurance, it is important to know that it is also possible to take out, in parallel, additional insurance to protect against temporary or permanent inability to work, disability resulting from an accident, or a serious illness. These three types of policy then cover every eventuality and allow the monthly loan repayment to be met in all circumstances.

It must be understood that mortgage insurance is primarily designed to protect the bank but, as a consequence, also protects the borrower and their family in the event of hardship.

The cost of mortgage insurance depends on the age and health of the borrower for the life insurance component, but also on the surface area of the property for the structural component in the event of restoration following a loss, which explains why insurance for a mortgage will be higher for a 5-room apartment in Kiryath Mala'hi, for example, than for a 2-room apartment in Ramat Aviv.

Over the years, even though the borrower's age increases and with it the health risks, the cost of this insurance decreases as the outstanding loan amount reduces with each repayment.

Most companies offer discounts only for the first six years , which leads to surprises thereafter, and few offer a uniform lifetime discount that considerably reduces the cost of this insurance.

This is where the involvement of an insurance broker with a substantial portfolio becomes critical.

What is essential to understand is that banks enter into agreements with insurance agencies, but when a plumbing problem arises, for example, the borrower very often finds themselves alone because the rest of their insurance policies are not held by that agency and the agency does not know them.

In such a case, who will the borrower turn to, the bank employee at whom they took out the loan? We wish them good luck!

This is why it is very important to contact an insurance broker from the outset, one who works with all companies so as to offer you the best rate but also to assist you in the event of a claim.

For any further information, please contact me directly on 054 307 0916 or by filling in the form below.

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