The home loan is a marvellous credit facility: It grants you access to home ownership, it allows you room to manoeuvre, and – best of all – it is inexpensive.

But, there is a trade-off. In order to grant you such a disproportionately large line of credit at such an exceptionally low rate of interest, the bank will use the home you just purchased as security to make up for some of the risk. What this means in practical terms is that they have claim to your property until you have paid the last cent on your mortgage.

But, this is not the only risk the bank will want to mitigate. They also want to ensure that the mortgage will be paid should you die.

Although you could probably argue that their claim to your property should be security enough, you should bear in mind that your bank does not want to own your property – it is not their business. They prefer the money, not the box. So, to ensure that they get paid and don’t end up being burdened with the sale of your property should the unforeseen happen, they are going to insist that you have life cover.

This whole life cover issue used to be a bone of contention between the bank and mortgage applicants. The reason for this is that the banks – having realised that there were some rich pickings to be made from life insurance – tried to force applicants to purchase additional life insurance via the bank’s own internal brokers instead of allowing applicants to cede their existing policies or to purchase and then cede additional cover via their own insurance brokers.