Home loan insurance: compulsory or voluntary, and how much it costs

Basis: the Lending Regulation issued with Decision 1627/2001/QĐ-NHNN (per ACC's summary article) and Joint Circular 86/2014/TTLT-BTC-NHNNVN; the content may have been superseded, so check against current regulations. Updated 24 October 2026.

When you prepare a loan application, bank staff often suggest buying insurance alongside it. The first question to clarify: is this a mandatory condition or your choice. The second: how much does it cost and what do you get in return.

1. Compulsory or voluntary

According to ACC's summary article citing the Lending Regulation of credit institutions (Decision 1627/2001/QĐ-NHNN), the regulation does not require customers to buy loan insurance; buying is an agreement between the bank and the customer, and many banks encourage it because it can help loan approval. In other words, you have the right to ask and to decline if you do not need it, but you may have to accept other conditions (a slightly higher interest rate, a lower limit) depending on the bank's policy.

Ask the bank to state in writing whether insurance is a condition for disbursement. Avoid relying on a verbal "it's compulsory for fast approval".

2. Two common groups of insurance

According to ACC, unsecured loans usually come with insurance protecting the borrower; mortgage loans usually come with insurance for the mortgaged asset. For a home loan, in practice you often meet:

• Insurance for the borrower (life, accident, critical illness): if the borrower dies or becomes unable to repay under the policy terms, the insurer pays the outstanding balance (up to the insured amount) to the bank, easing the burden on the family.
• Property insurance (fire, explosion, natural disaster): protects the value of the home that is mortgaged; banks are usually interested because the collateral is that home.

Which type applies and which risks are insured is set by the insurance contract, not by the bank. Read the exclusion clauses carefully.

3. How much it costs and whether it is worth it

The fee is agreed between the insurer and you. Thời báo Tài chính Việt Nam (27 July 2026) reported that one bank charges a fee of about 1% of the loan value in year one and cuts the rate from 12% to 11.5% per year for customers who buy insurance.

Example for a 2 billion VND loan:

Item	Without insurance	With insurance
Year-one interest rate	12% per year	11.5% per year
Year-one interest (estimate)	240 million	230 million
Year-one insurance fee	0	about 20 million (1%)
Year-one cost difference		up about 10 million

A 0.5-point rate cut on 2 billion is 10 million VND a year, lower than the 20 million fee; so the year-one cost rises by about 10 million, in return for protection. Questions to ask: how long does the rate-cut incentive last, are the fees in later years calculated on the remaining balance or the original loan amount, and is any fee refunded on early settlement.

4. When to consider buying

1. You are the main earner and your family depends on the monthly payment.
2. The loan is large relative to your income and your emergency fund is thin.
3. You do not yet have separate life or accident insurance that covers the outstanding balance.
4. The home is the main collateral and you want to protect against fire, explosion and natural disasters.

If you already have your own adequate insurance, compare the fee and benefits with the package the bank offers before deciding; there is no need to buy duplicate cover.

5. Question list before signing

1. Is insurance a mandatory condition or optional? Get it in writing.
2. Which insurer, how much is the fee, paid once or annually?
3. What benefits are covered, what is excluded, who receives the money?
4. If you do not buy it, do the interest rate or loan limit change?
5. Is any fee refunded on early repayment? See Early repayment.

This fee also needs to be added to your cash flow; see Calculating cash flow when buying a home.

6. Your rights once you have bought it

• Read the insurance certificate carefully and keep a copy together with the credit contract; relatives should know this insurance exists and whom to contact if something happens.
• Ask about the cooling-off period: many insurance contracts allow cancellation within a number of days after signing; ask the insurer about the conditions for cancelling and getting a refund.
• On early settlement or switching banks: ask whether part of the unused fee is refunded; if it is not stated in the contract, ask for written confirmation.
• If you feel pressured to buy: note the time, the people involved and what was said, and send a complaint to the bank's hotline or to the State Bank branch in your province or city.

The decision to buy or not should rest on your family's real need for protection, not on pressure at the time of disbursement.

• ACC Group — What is loan insurance? Is it compulsory? (Decision 1627/2001/QĐ-NHNN, Joint Circular 86/2014/TTLT-BTC-NHNNVN; no publication date shown), accessed 24 October 2026.
• Thời báo Tài chính Việt Nam — Home loan rates "anchored" at double digits, hopes of cooling are not easy (insurance fee about 1% of the loan in year one, rate cut from 12% to 11.5%), 27 July 2026.