Mortgage insurance typically refers to insurance that a lender will take out to protect the mortgage in the event that the mortgager defaults on his payment. Although in South Africa, the term mortgage insurance is more often associated with credit insurance which will protect individuals' mortgage payments in the event of retrenchment, contraction of a dread or terminal illness or permanent disability preventing the insured from working. Banks or mortgage societies may make owning a mortgage insurance policy mandatory although this is not always the case. Often, it is assumed that, by default, the house itself is sufficient collateral against defaulting. This is incorrect as the property will usually sell well below the remaining mortgage in the event of the mortgager defaulting. This is especially true if the default occurs within the first few years of the term. Due to this reason, it is wise to purchase mortgage insurance regardless of whether it is mandatory as you, the mortgager, will be held liable for the loss that your lender incurs upon sale of the property.