House loans require insurance (2026).

"Do I need insurance for a house loan?" This is a common question for those applying for a house loan. The main types of insurance recommended by banks include life insurance, mortgage-reducing term assurance, and fire insurance for the property. This article will answer this question.

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Do I need insurance for a house loan?

When applying for a house loan, banks often recommend insurance alongside the loan application. However, this isn't mandated by the bank; it's the borrower's decision. Each type of insurance has different details, as follows:

Life Insurance for Mortgage-Reducing Term Assurance (MRTA)

For mortgage-reducing term assurance, borrowers have the option of purchasing it or not. Not purchasing it won't affect loan approval.

However, in terms of protection, in the event of death or permanent total disability, the insured will receive compensation equal to the remaining sum insured. The insurance company will then be responsible for paying the remaining debt to the bank.

The insurance premium depends on gender. The age of the loan applicant, the insured amount, and the coverage period are all factors to consider. Premium payments are usually made in a single lump sum, or some banks allow loan applicants to pay premiums in installments as part of the loan amount.

For those currently paying off a mortgage and wondering if they need insurance for their house loan, life insurance to protect against mortgage debt is an attractive option. In the event of an unforeseen event affecting the loan applicant, the family or heirs will not have to bear the burden of repaying the debt.

Things to know before purchasing life insurance to protect against mortgage debt:

1. Banks do not force you to buy life insurance to protect against mortgage debt, and it cannot be used as a condition for loan approval. Loan applicants can choose to purchase it or not, depending on their preference.
2. Life insurance premiums for mortgage debt protection of 10 years or more are tax deductible up to a maximum of 100,000 baht.
3. If the debt is repaid before the insurance coverage period ends, the policy can be surrendered for the remaining cash value. In the event of the borrower's death before the policy expires, the beneficiary can claim compensation.
4. If you wish to refinance, you can choose to surrender the policy. Alternatively, you can choose to change the beneficiary from your current bank to a new bank. Which option is more cost-effective? Consider the following:

Insurance Premium
How much is the premium for the new bank? What does it cover?

Cash Back
How much cash back can you get (if you surrender the policy from your current bank)?

Promotions
What special promotions does the new bank offering refinancing have?

Value for Money
Compare the benefits and value for money.

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Residential Fire Insurance

Fire insurance is a mandatory insurance requirement. Therefore, the question of whether a house loan requires insurance is generally answered by banks. This is because if an unforeseen event occurs to the house, the insurance will at least help compensate for the damage.

Residential fire insurance covers the building (excluding the foundation) used as a residence, such as houses, townhouses, semi-detached houses, shophouses, apartments, condominiums, etc.

It also includes property within the building, such as furniture, decorations, fixtures, household appliances, electrical equipment, musical instruments, audio equipment, kitchenware, clothing, and other residential assets. This insurance provides coverage for damage to the house and its contents, including:

1. Fire, including forest fires, bushfires, thicket fires, and clearing fires.
2. Lightning (including damage to electrical appliances and equipment caused by short circuits from lightning).
3. All types of explosions.
4. Damage from collisions and/or impacts by vehicles or animals such as elephants, horses, cows, buffaloes, etc.
5. Damage from aircraft and/or objects falling from aircraft, including self-propelled rockets and spacecraft, excluding rockets used as weapons.

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In addition, other disaster coverage can be purchased, such as:

1. Water damage caused by accidental leakage, spillage, or overflow of water or steam from pipes, tanks, heating systems, cooling systems, air conditioning systems, pumps, and rainwater entering the building due to damage to the roof, windows, doors, door and window frames, vents, skylights, pipes, or gutters.

2. Storm damage.

3. Flood damage, meaning water overflowing or flowing from normal waterways, whether natural or man-made (excluding roof gutters), or caused by a broken public water pipe resulting in flooding from outside the insured building or the building storing the insured property. This also includes floods caused by storms, flash floods, and mudslides.

4. Earthquake, volcanic eruption, or tsunami caused by natural forces. This also includes floods caused by earthquakes or volcanic eruptions. However, it does not cover direct or indirect damage caused by earthquakes or volcanic eruptions caused by objects from space.

5. Hail damage. This includes rainwater, frost, snow, sand, or dust particles flowing into the building through cracks, structures directly damaged by hail, or water from sprinklers or other pipes damaged by hail.

Source: Office of the Insurance Commission (OIC)

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The insured amount or coverage should not be less than 70% of the value of the house and property. This way, even with partial damage, compensation will still be received as if the insurance had been fully insured. The premium is approximately 1,000-3,000 baht per million baht of insured amount, which is considered worthwhile when comparing the cost and coverage received.

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Thank you for the valuable information from DD Property.