When you take a mortgage in Israel you must hold two policies: life insurance covering the loan, and structure insurance on the property itself. The bank requires the cover but cannot require you to buy it from them. Comparing across insurers typically reduces the premium by roughly 30% to 50%, and because the policy runs for the life of the loan, the cumulative difference is substantial.
What the two policies actually are
Mortgage life insurance pays off the outstanding loan balance if a borrower dies, so the family keeps the home instead of the debt. The sum insured decreases over time as the loan is repaid.
Structure insurance covers the physical building โ walls, plumbing, permanent fixtures โ against fire, water damage, earthquake and similar events. Note that it covers the structure, not your furniture and belongings; contents insurance is separate and is not required by the bank.
Why the bank version costs more
It is the path of least resistance. You are in the branch, signing a stack of documents on the most stressful financial day of your life, and the policy is presented as one more form in the pile. Nobody is comparing anything at that moment โ which is precisely why the default is priced the way it is.
A single comparison across the Israeli insurers commonly produces a materially lower premium for identical cover. And because a mortgage runs for twenty to thirty years, a monthly difference that looks small on the page compounds into a genuinely significant number over the life of the loan.
You can switch after you have signed
This surprises most people: you are not locked in. You can replace the bank's policy with an equivalent one from another insurer at any point, as long as the cover satisfies the bank's requirements. The new insurer issues the policy, the bank is notified, and the old one is cancelled.
If you signed at the bank years ago and never revisited it, that is not a mistake โ it is simply what almost everyone does. It is also entirely reversible.
While you are at it
Buying a home usually triggers two other things worth handling at the same time: contents insurance for everything inside the walls that the structure policy does not cover, and a will โ because a property is typically the largest asset a family owns, and Israeli succession rules may not distribute it the way you assume.
Common questions
Is mortgage insurance mandatory in Israel?
Yes. Israeli banks require both life insurance covering the loan and structure insurance on the property as a condition of the mortgage. What is not mandatory is buying those policies from the bank itself.
Can I buy mortgage insurance somewhere other than my bank?
Yes, and you generally should compare. The bank may require that the cover exists and meets its conditions, but you are free to purchase an equivalent policy from any licensed insurer.
How much can I save by comparing?
In practice a comparison across insurers commonly reduces the premium by roughly 30% to 50% for equivalent cover. The exact figure depends on age, health, loan size and term.
Can I switch after I have already signed with the bank?
Yes. You can replace the bank's policy at any stage with an equivalent policy from another insurer. The new insurer issues cover, the bank is notified, and the previous policy is cancelled.
Does structure insurance cover my furniture?
No. Structure insurance covers the building itself โ walls, plumbing, permanent fixtures. Furniture, electronics and personal belongings fall under contents insurance, which is separate and not required by the bank.
I am an oleh with a short credit history in Israel. Does that affect the insurance?
Insurance pricing is driven mainly by age, health and the loan itself rather than by Israeli credit history, so a short time in the country does not usually disadvantage you on the policy.
Already signed at the bank?
You can switch. We compare across all the insurers and handle the change with the bank โ no cost to check.