You don't necessarily need life assurance when you take out a mortgage loan. That's the official word from some of the big banks.
But attorneys say, in practice, life assurance is a prerequisite in at least 80 percent of all letters of grant.
The banks place a high premium on risk and say they prefer that you and your dependents are protected, which is why they recommend you take life assurance when you take out a bond.
If you die and your dependents cannot afford the mortgage payments, the bank can repossess the property to recover the money it lent you.
Kobus Engelbrecht - a senior manager at Sanlam product development and Sanlam Life - says people who apply for home loans are often contacted by bank brokers who try to sell them life assurance.
"I think many people feel morally obliged to take out life assurance, although no pressure may be placed on them."
Engelbrecht says conditional selling is prohibited by the Insurance Act which states that people may not be forced to buy assurance.
He makes the point that the bond itself is the bank's security, but adds that buying a home is an excellent time for an assessment of an individual's financial needs.
"There should not be any pressure on you to purchase particular products, but I don't have a problem with pressure being placed on people to get proper financial assessments done."
Boland Bank said clients are not compelled to take out life assurance subject to credit worthiness, security offered or other assurance ceded.
NBS Managing Director John Briscoe says the property is the bank's ultimate form of security.
Whenever a person is in a situation to cede a new or existing policy, NBS will ask for it.
NBS and First National Bank say life cover is up to you, but they will make you aware of the consequences if the loan repayments are not met in the event of death, disability or any other reason.
Dave Wright, Senior Manager: Credit of Standard Bank's Home Loans Division, says Standard Bank requires ceded life cover as a condition of the loan in instances where, in the bank's opinion, the "occupational risk or the environmental risk" warrants it.
Standard Bank also insists on ceded life cover as additional security for home loans where the joint income of applicants is less than R3 500 a month in certain areas.It says when defaults occur due to death or disability on smaller loans, there is frequently no or limited existing life cover. And, unless it is ceded to the bank, it is used to meet other immediate needs.
Standard Bank says in these circumstances losses are almost inevitable with high cost to the bank and the borrower's family.
Absa says that in individual cases a client's financial position might necessitate life assurance. The bank admits this may be a pre-requisite to granting your loan.
Most banks say Group Life benefits cannot be ceded and therefore don't qualify where ceded life cover is required as a condition of your loan.
Life policies can be very useful essential in some cases.
But if you're buying property, watch out for financial institutions, brokers or life assurers who try and sell you products that don't suit your needs.