Is Life Insurance Mandatory for Home Loans?

Is Life Insurance Mandatory for Home Loans?

Although life insurance is not a legal requirement for all home loans, banks do not approve the loan applications of customers who do not take out life insurance. In other words, even if it is not legal, life insurance is made mandatory by banks, and loan approval is only given to those who have life insurance.

What is the Purpose of Life Insurance?

Since home loans generally have much longer terms than other loans, all banks want life insurance to be taken out to secure the loan repayments. In the event of the death of the insured borrower, the outstanding loan amount is covered by the life insurance policy, thus both the bank collects its receivable and the borrower's relatives are saved from hardship because the debt is paid.