What you need to know about mandatory life insurance for your UAE home loan

Buying a home is one of the biggest commitments you’ll ever make. But have you considered what happens to your mortgage if something happens to you? That’s where mortgage life insurance comes in — a type of coverage that protects your home and your family.

In this guide, we’ll explain everything you need to know about mortgage life insurance in the UAE, including how it works, whether it’s mandatory, and how to choose the right plan.

Is Life Insurance Mandatory for Mortgages in the UAE?

Yes, life insurance is mandatory for all home loan applicants in the UAE. Banks will not approve a mortgage without an active life insurance policy in place.

This requirement protects both you and the bank. If the borrower passes away before the mortgage is paid off, the insurance covers the outstanding loan balance, so the family doesn’t lose the property.

Why Is Life Insurance Required for a Mortgage?

The purpose of mortgage life insurance is simple: financial protection. A mortgage can last 15–25 years — and anything can happen during that time. If the unexpected occurs, mortgage life insurance ensures:

• •The loan is repaid in full
  
  
• •Your family keeps the home
  
  
• •The bank’s risk is covered
  

In short, it prevents your loved ones from inheriting debt or dealing with legal complications during an already difficult time.

What Are the Compulsory Lines of Insurance in the UAE?

In addition to life insurance for mortgages, the UAE mandates other insurance policies, especially for financial and legal protections. These include:

• Car insurance (mandatory third-party or comprehensive)
  
  
• Health insurance (mandatory for residents in most Emirates)
  
  
• Life insurance (required for mortgage holders)
  
  

Mortgage life insurance is a compulsory requirement by all UAE mortgage lenders, both for residents and non-residents.

Options for Obtaining a Compulsory Life Insurance

When applying for a mortgage, you have two main options for obtaining life insurance:

1. Bank-Provided Insurance

• Many banks partner with insurers to offer bundled life cover
  
  
• Premiums are often included in your monthly mortgage payment
  
  
• Coverage amount reduces as the loan balance decreases
  
  

2. Independent Insurance Providers

• You can choose a policy from an external insurer (if the bank allows)
  
  
• May offer more flexibility or additional benefits
  
  
• In some cases, you can negotiate better rates or family coverage
  
  

At Mortgage Finder, we guide you on whether using the bank’s default insurance or a custom policy is best for your needs.

What Are the Three Main Types of Life Insurance?

When researching life insurance, you may come across several terms. Here’s a breakdown of the three main types relevant to mortgage holders:

1. Decreasing Term Insurance

• The most common type linked to mortgages
  
  
• The coverage amount decreases as your loan decreases
  
  
• Usually lower premiums
  
  

2. Level Term Insurance

• Fixed coverage amount throughout the policy
  
  
• More expensive but can offer added family protection
  
  
• Sometimes used if you want your family to receive a payout beyond just covering the mortgage
  
  

3. Whole Life Insurance

• Covers you for your entire life (not just the mortgage term)
  
  
• Has investment components or cash value
  
  
• Less common for mortgage protection but may suit long-term financial planning
  
  

Factors That Affect Life Insurance Premiums

Your mortgage life insurance premium depends on several personal and loan-related factors:

– Your age (younger = lower premiums)

– Loan amount and term (bigger loans = higher coverage)

– Health and lifestyle (pre-existing conditions or smoking may increase cost)

– Policy type (level vs decreasing term)

– Insurer (bank vs private provider rates)

 Example (2025 UAE Market Rates):

Mortgage Amount	Monthly Premium Range
AED 1 million	AED 200 – AED 350
AED 2 million	AED 400 – AED 700

Tip: Ask your mortgage consultant to break down these costs upfront — they’re sometimes bundled into your mortgage installment.

What Is Mortgage Life Insurance?

Mortgage life insurance is a type of term insurance that specifically pays off your outstanding home loan if you pass away. It ensures your family does not have to continue mortgage payments or risk losing the property.

It’s usually required by banks and tied directly to your loan. Once the mortgage is fully repaid, the policy ends.

Understanding Mortgage Life Insurance

Mortgage life insurance is:

– Loan-specific: It only pays out the remaining loan amount

– Non-transferable: If you refinance or switch banks, you may need a new policy

– Non-cashable: There’s no maturity value or savings benefit

That said, some buyers prefer more flexible plans that offer additional protection for the family. Your Mortgage Finder advisor can help you compare both types.

Advantages of Mortgage Life Insurance

Here’s why having mortgage life insurance is a smart move:- Ensures your family keeps the home

 – Eliminates mortgage debt in case of death

 – Required to complete the mortgage process

– Affordable premiums, especially for younger borrowers

 – Often built into your mortgage payment (easy management)

Mortgage life insurance is more than just a bank requirement — it’s a practical way to protect your home and your loved ones. It ensures that even in the worst-case scenario, your family keeps the roof over their heads without financial stress.

Whether you go with the bank’s default policy or choose your own, what matters most is being informed. At Mortgage Finder, we’re here to walk you through every step — from choosing the right coverage to getting your mortgage approved quickly and smoothly.

Need help understanding your mortgage life insurance options?

Contact our team of expert mortgage advisors today — we’ll help you choose the right policy and simplify the process for you.

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Please note that this information is intended for general use only. Life insurance coverage must be legally administered by a licensed life insurance advisor after a thorough investigation of your individual needs and circumstances.

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