Why do you need insurance for a house loan?
Last updated: 3 Aug 2025
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We've probably heard this often, and everyone who has purchased a home has likely experienced the experience of being asked to purchase insurance. This leaves one wondering if it's necessary, given the already substantial mortgage payments. Having to pay for additional insurance can be a significant burden. In reality, homeowners are required to purchase both mandatory and optional insurance when applying for a home loan.
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Fire Insurance: A Required Insurance
When Applying for a Home Loan
Fire insurance is a mandatory insurance for homebuyers, regardless of the price of the home. This is because, when applying for a home loan, buyers must use their home as collateral with the bank they are applying for. Therefore, banks require buyers to purchase fire insurance to cover potential damage to the home, including fire, flooding, lightning strikes, and burglary. However, whether you're buying a home with cash or have already paid it off, every homeowner should always have fire insurance. Because the unexpected can happen at any time, purchasing fire insurance can help protect your home from thousands of baht in insurance premiums, potentially covering hundreds of thousands or millions of baht in damages.
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Life Insurance: An Optional Insurance
When Applying for a Home Loan
Life insurance is another type of insurance that most home loan applicants are invited to purchase by the bank they are applying for the loan from. In reality, borrowers have the right to decide whether or not to purchase it. Even if they don't purchase life insurance, it won't affect their loan approval. The key factors in home loan approval are the borrower's financial status, income, career stability, and existing debt. However, life insurance is also a beneficial financial product for home loan applicants. It can be purchased for a limited time, providing coverage only during the period the home loan is being repaid. This ensures that if an unexpected event occurs and the main breadwinner or primary mortgage payer passes away, the family will have the insurance to continue paying for the home, avoiding foreclosure and subsequent housing problems. Although it's not mandatory, it's still a worthwhile insurance option to enhance financial security for the family.
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Insurance products, whether fire insurance or life insurance, are intended to help mitigate the risks associated with home loan payments. In the event of an unforeseen event, home loan applicants will have the insurance proceeds to help alleviate financial hardship, enabling them to resume their lives. Imagine if your house caught on fire and you didn't have fire insurance, where would you and your family go? Where would you find the money to start over? Or if your main breadwinner were to die, where would your family get the money to continue paying off your home loan? Considering these potential risks, you can see the importance of having insurance to provide peace of mind for yourself and your family.
___________________________________________
Thank you for the great information from REIC.
___________________________________________
Fire Insurance: A Required Insurance
When Applying for a Home Loan
Fire insurance is a mandatory insurance for homebuyers, regardless of the price of the home. This is because, when applying for a home loan, buyers must use their home as collateral with the bank they are applying for. Therefore, banks require buyers to purchase fire insurance to cover potential damage to the home, including fire, flooding, lightning strikes, and burglary. However, whether you're buying a home with cash or have already paid it off, every homeowner should always have fire insurance. Because the unexpected can happen at any time, purchasing fire insurance can help protect your home from thousands of baht in insurance premiums, potentially covering hundreds of thousands or millions of baht in damages.
___________________________________________
Life Insurance: An Optional Insurance
When Applying for a Home Loan
Life insurance is another type of insurance that most home loan applicants are invited to purchase by the bank they are applying for the loan from. In reality, borrowers have the right to decide whether or not to purchase it. Even if they don't purchase life insurance, it won't affect their loan approval. The key factors in home loan approval are the borrower's financial status, income, career stability, and existing debt. However, life insurance is also a beneficial financial product for home loan applicants. It can be purchased for a limited time, providing coverage only during the period the home loan is being repaid. This ensures that if an unexpected event occurs and the main breadwinner or primary mortgage payer passes away, the family will have the insurance to continue paying for the home, avoiding foreclosure and subsequent housing problems. Although it's not mandatory, it's still a worthwhile insurance option to enhance financial security for the family.
___________________________________________
Insurance products, whether fire insurance or life insurance, are intended to help mitigate the risks associated with home loan payments. In the event of an unforeseen event, home loan applicants will have the insurance proceeds to help alleviate financial hardship, enabling them to resume their lives. Imagine if your house caught on fire and you didn't have fire insurance, where would you and your family go? Where would you find the money to start over? Or if your main breadwinner were to die, where would your family get the money to continue paying off your home loan? Considering these potential risks, you can see the importance of having insurance to provide peace of mind for yourself and your family.
___________________________________________
Thank you for the great information from REIC.
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