Mortgage insurance in Israel (mashkanta)

When a French-speaking

couple signs their mashkanta (mortgage in Israel), everything moves fast: the bank, the notary, the documents in Hebrew. Mortgage insurance is often signed at the counter, without anyone asking whether it is the right one. Yet it is one of the few lines in the file where you have a say.

Mortgage insurance in Israel: two policies, not one

Mortgage insurance is compulsory and has two parts. The first is life insurance: if one or both borrowers die, the bank receives the full amount still to be repaid. The second covers the walls: it allows the property to be restored after a fire, a flood, an earthquake, a short circuit or a major plumbing problem.

These two policies protect the bank first, and by extension you and your family. That is why they need to be chosen carefully.

Mashkanta insurance: you can compare before you sign

The bank may require death cover for the amount of the loan, with itself as beneficiary up to the outstanding balance. Under Bank of Israel circular 451, the bank may require life insurance up to the amount of the loan, with itself as beneficiary, and insurance of the property. But it must tell you that you can take out the cover directly, without going through the insurance agency it controls. So have offers compared before you sign, and simply send the bank the certificate of cover.

What makes the price of mortgage insurance vary

The insured sum falls with the loan balance, but the death cover premium does not necessarily go down: it rises as you get older. Check that the insured sum really follows the outstanding balance. If it stays artificially high, you are paying for cover you no longer need.

The trap of the introductory discount

Many offers advertise a big discount in the first years, then the premium goes back up, and that is the nasty surprise. How long the discount lasts varies between insurers, and some offers apply it for the whole term of the loan. Always ask what happens to the price after the discount period, and compare the cost over the whole term of the loan.

Before you sign your mashkanta: the checklist

There are also additional policies: temporary or permanent incapacity for work, disability after an accident, critical illness. They let you keep meeting your monthly repayments even if your income stops.

Another argument for going through a broker: when a plumbing problem arises in your flat, the bank employee is not the right person to call. With a francophone insurance broker who works with all the companies, you have someone who knows your file and supports you in the event of a claim. For any further information, call me on 054 307 0916 or fill in the form below.