Borrower insurance: why banks require it
Borrower insurance (often called ADI for Assurance Deces Invalidite, death and disability insurance) is a systematic requirement by Moroccan banks for any mortgage. It is not strictly legally mandatory, but no Moroccan bank will release a loan without this coverage. So it is a de facto contractual obligation that represents a major cost line often underestimated by borrowers.
The role of the insurance: guarantee to the bank that in case of death or total disability of the borrower, the outstanding principal is repaid by the insurer. This protects the bank, but also your family who will not be left with a heavy debt. The cumulative cost over 20 years can reach 30,000 to 80,000 MAD depending on your age and the bank, which is significant and must be integrated into any rigorous simulation.
ADI: standard coverage (death, disability, ITT)
Standard borrower insurance in Morocco generally covers three main guarantees: (1) Death: if you die before the end of the loan, the insurer repays the outstanding principal to the bank. (2) Absolute and Permanent Disability (IAD): in case of total disability preventing any professional activity, the insurer takes over. (3) Temporary Work Disability (ITT): in case of prolonged sick leave (often beyond 90 days), the insurer pays the monthly installments until activity resumes.
Some banks offer additional options: unemployment coverage (rare in Morocco), job-loss coverage for salaried workers, or major illness coverage. These options add cost without always providing meaningful protection depending on your situation. Read the exclusions: high-risk sports, certain preexisting conditions or travel to war zones can void coverage. Always request the general conditions before signing.
Real cost: annual rates and concrete calculation
In Morocco, borrower insurance rates generally range between 0.30% and 0.55% per year of the initial capital for a healthy borrower aged 30 to 40. The rate climbs with age (up to 1% or more after 55) and depends on your health status declared in the medical questionnaire. Banks calculate insurance either on initial capital (fixed amount throughout the loan) or on outstanding capital (decreasing amount). Both methods exist in Morocco depending on the institution.
Concrete calculation on a 800,000 MAD loan over 20 years at 0.40% annual on initial capital: annual cost = 800,000 × 0.40% = 3,200 MAD/year, or 267 MAD/month added to the loan payment. Over 20 years, total cost = 3,200 × 20 = 64,000 MAD, or 8% of capital borrowed in pure insurance cost. This is significant and must be integrated into the total cost of credit to compare bank offers objectively.
With a degressive rate (outstanding capital), the calculation is more complex but cumulative cost is generally 30% to 40% lower because the capital decreases each month. On the same loan, cumulative degressive cost: 35,000 to 40,000 MAD instead of 64,000 MAD. Ask precisely which mode your bank applies before signing. Our mortgage simulator integrates this parameter into total monthly payment calculation.
Impact on TAEG: why insurance changes the comparison
The TAEG (Total Annual Effective Rate) includes the nominal loan rate, origination fees and borrower insurance, making it the only valid indicator to compare two bank offers. A bank showing a 4.8% nominal rate but imposing 0.50% insurance on initial capital can be more expensive than a bank at 5.1% with 0.30% insurance on outstanding capital. The TAEG levels the comparison.
Numerical example on a 800,000 MAD loan over 20 years: Bank A rate 4.8% + insurance 0.50% initial capital → TAEG around 5.7%. Bank B rate 5.1% + insurance 0.30% outstanding capital → TAEG around 5.5%. Bank B costs approximately 15,000 MAD less over the term despite a seemingly higher nominal rate. Always demand TAEG in writing and the total cost of credit (sum of all payments + fees + insurance over the full term).
Insurance delegation: is it possible in Morocco?
Insurance delegation (subscribing borrower insurance with an insurer external to the bank) is a right in France via the Lemoine law, but it is not systematic in Morocco. In practice, Moroccan banks prefer their in-house insurance (often partner groups like Wafa Assurance for Attijariwafa Bank, Saham for BMCE, etc.) because it generates additional commercial margin.
Some institutions nonetheless accept external insurance on a case-by-case basis, particularly for high-value clients or when firmly negotiated. If you already have solid coverage via your employer or a personal life insurance policy, explicitly ask whether it can be accepted in delegation. Potential savings can reach 20,000 to 30,000 MAD over the loan term. At minimum, request several quotes from different insurers before signing the bank's standard contract.
Medical questionnaire: what to declare (and not declare)
Before signing the insurance contract, you complete a detailed medical questionnaire: personal and family history, chronic conditions, ongoing treatments, hospitalizations, high-risk sports, travel to certain zones, etc. Be honest and thorough: any false declaration can lead to contract nullity in case of claim, which would leave your family with the loan to repay.
If you have medical history, the insurer may apply a surcharge (rate increase) or exclude certain guarantees (e.g. excluding cardiac conditions). In some cases, insurance can be refused. In that case, request written reasons and explore other insurers: practices vary between Wafa Assurance, Saham, AXA, Sanad, etc. For high-risk profiles (advanced age, heavy history), the Moroccan AERAS convention can offer adapted solutions.
Integrating insurance into your rental profitability calculation
For a rigorous rental investment, borrower insurance must be integrated in two places in your simulation: (1) In the total monthly payment = loan payment + monthly insurance premium. This total payment is what you actually pay each month and must be compared to net rent to calculate cash flow. (2) In the total cost of credit to calculate real TAEG and compare banks.
Example: loan 800,000 MAD at 5% over 20 years with insurance 0.40% initial capital. Pure loan payment = 5,280 MAD. Monthly insurance premium = 267 MAD. Total payment = 5,547 MAD. If your net rent is 7,000 MAD/month after tax, your monthly cash flow = 7,000 - 5,547 = 1,453 MAD/month. Without insurance, you would have calculated 1,720 MAD/month, overestimating cash flow by 18%. Always integrate insurance into our ROI calculator to avoid this classic mistake.
FAQ Mortgage insurance Morocco 2026
- Is borrower insurance tax-deductible? Yes, under the real-expenses rental regime, the insurance premium tied to the rental property loan is deductible. Under the flat-rate regime, it is assumed to be covered by the 40% deduction.
- Can I change insurer mid-loan? Theoretically yes, but it requires written bank approval of the new contract. In practice it is rarely accepted in Morocco, except under strong negotiation.
- What happens if I prepay the loan? Insurance stops with full loan repayment. If you have paid the annual premium in advance, you can request a prorated refund, ask for it explicitly.
- Does my co-borrower also need to be insured? Yes, generally each borrower must be insured up to their share (50/50 for a couple, or another split per the contract). Total cost is split but remains similar in aggregate.
- Does insurance cover MREs residing abroad? Yes, but sometimes with specific conditions (exclusion of certain countries, surcharge for residence in risk zones). See our MRE mortgage guide 2026.
Useful references
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