Directive 451 lets the bank require life and property insurance only if it is the irrevocable beneficiary, and only within the amount of the loan. The bank must tell you that you may insure directly, not through its own insurance agent. It may insist on the conditions that protect its rights, and must tell you within 14 days if your outside policy does not meet them. No insurance may be required on a loan of up to ₪30,000.
Premiums depend on age and health, so compare the bank's offer with quotes from independent insurers. If you took the policy through the bank, you can cancel it at any time without a fee by presenting another policy that names the bank as irrevocable beneficiary.
The pitfall is accepting the bank's policy by default, or forgetting to renew an outside policy: if you do not provide a new policy, the bank may insure you itself and charge you. It must warn you at least 30 days before an outside policy expires.
Example
A ₪1,500,000 loan needs life cover up to ₪1,500,000. If the bank's policy costs ₪3,000 a year and an outside insurer quotes ₪2,400 for the same cover (illustrative figures), switching saves ₪600 a year, about ₪15,000 over 25 years.