Do You Need Life Insurance for a Mortgage?

Buying a home in the UAE as an NRI is a big step, and the mortgage that comes with it is an equally significant responsibility. During the loan process, you will likely be told that insurance is required before your mortgage can be approved. While this may seem like just another formality, it plays a crucial role in protecting both the loan and your family. In most cases, this requirement is met through a term insurance plan that ensures your home loan does not become a financial burden in your absence.

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Is Life Insurance Mandatory for a Mortgage in the UAE?

Yes, in most cases, life insurance is a mandatory requirement for mortgage approval in the UAE. Banks insist on it for two key reasons:

To make sure that the loan is repaid even if the borrower suffers an untimely death.
To protect the borrower’s family from inheriting a financial burden.

If a borrower suffers an untimely death during the loan tenure, the insurance policy pays off the outstanding mortgage balance, ensuring the family can retain the property. For NRIs and expats, this becomes even more important because families may be living across countries and may not be prepared to manage large liabilities suddenly.

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Life Cover

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Life Cover

@ Starting from ₹ 12/day⁺

Why Do You Need Life Insurance for a Mortgage?

Even if it were not mandatory, life insurance would still be an important financial tool for homeowners.

Protects your family from debt

Without any life insurance cover, the burden of both the house and the outstanding money remains a liability.
Ensures your family keeps the home

The policy clears the loan, allowing your spouse or children to continue living in the property without disruption.
Supports financial stability

Along with the mortgage, families often face living expenses, education costs, and lifestyle adjustments. Insurance helps reduce this burden.
Protects both borrower and lender

Banks reduce their risk, while borrowers ensure their dependents are not financially exposed.
Peace of mind for NRIs

For expatriates whose families may be split between India and the UAE, this ensures continuity and financial security regardless of location.

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What Term Insurance for a Mortgage Actually Means?

Although banks refer to this requirement as “life insurance,” what is commonly used in the UAE is a term insurance plan aligned with the home loan.

You take a mortgage, and alongside it, you have a term insurance plan that covers the loan amount. If the policyholder passes away during the tenure, the insurer pays the outstanding balance directly to the lender.

This ensures that the loan is settled, the property remains with the family, and there is no transfer of debt. It is a simple mechanism, but one that plays a critical role in protecting both the lender and the borrower’s dependents.

How Much Coverage Should You Ideally Have?

Many borrowers make the mistake of matching their insurance cover exactly to their loan amount. While this clears the liability, it does not account for what your family will need beyond that.

A better financial approach is to look at your overall financial exposure. This includes not just the mortgage, but also ongoing household expenses, children’s education, and any other financial commitments.

A term insurance for NRI plan should ideally cover:

The full outstanding home loan
Several years of household expenses
Future financial goals, such as education
Any additional liabilities, like other debts

This ensures that your family is not only debt-free but also financially stable.

Final Thoughts!

While taking out a mortgage in the UAE is mandatory to have insurance, how you go about it will decide the safety net you create for your family. While opting for simple mortgage insurance might be enough to ensure the loan is approved, it might fall short of providing security for your family’s future financially. However, opting for a proper term insurance plan will cover your mortgage and any other financial commitments you make. This becomes especially important for NRIs who manage their lives between different countries.

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What is Term Life Insurance

FAQ's

Q. Is term insurance mandatory for a home loan in the UAE?

Ans: In most cases, yes. UAE banks require borrowers to have an active insurance policy before approving or disbursing a mortgage. This makes sure that the outstanding loan is repaid if the borrower suffers an untimely death during the tenure.
Q. Is mortgage insurance the same as term insurance?

Ans: Not exactly. While mortgage insurance schemes from banks are restricted to the total cost of the loan and decrease over time, term insurance policies cover not only the loan but also the overall requirements of the family.
Q. Can NRIs buy term insurance instead of taking the bank’s insurance?

Ans: Yes, some lenders provide an option wherein they can accept your term insurance plan. But it should comply with the requirements of the banks.
Q. What happens to the home loan if the insured person passes away?

Ans: In case the individual has an effective term insurance policy, the premium is settled with the bank on behalf of the family members.
Q. How much term insurance cover should I take for a mortgage?

Ans: Ideally, your cover should include the outstanding loan amount along with additional protection for living expenses, children’s education, and other financial goals.

˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in

Rs. 400/month is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 400/month (Rs.13/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 230 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 12/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 497/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 487/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 626/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 905/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. ₹361/month is the starting price for a ₹1 crore loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10

+Rs. 1,267/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.

+Rs. 447/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs.679/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 910/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,374/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,924month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

Women

+Rs. 400/month is Starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 461/month is the starting price for a 1 crore term life insurance for an 24 year-old female, non-smoker, with no pre-existing diseases, cover upto 54 years of age.

1,642/month is the starting price for a 1 crore term life insurance for an 44 year-old female, non-smoker, with no pre-existing diseases, cover upto 74 years of age.

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

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Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.

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