Do I need life insurance in Spain? seven honest questions for expats
Nobody walks into our office asking for life insurance. They come in about the car, the flat, the mortgage. And quite often, hand already on the door, someone turns round and asks: “By the way, the life insurance thing… do I actually need it?” This is the long answer to that question.
No scary statistics here. We'll do what we do across the desk: seven questions. Answer them honestly, thinking about your home and your people. By the end you'll know whether this is for you.
Who would be left without your income?
Picture the first of any month. Rent or mortgage, electricity, school, the weekly shop, the car. Now take your salary, or your self-employed income, out of the picture. Who would have to cover all of that?
- Your partner, if the household runs on two incomes.
- Your children, until they can stand on their own feet.
- Your parents, if you help them out, here or back home.
- Your business partner, if the business runs on you.
If that list is empty, skip to the question about disability: that's the one that applies to you. If you thought of even one name, keep reading.
How many months could your household hold out?
Take your savings and divide them by one month of fixed costs. That number is how long your family could carry on without making hard choices: moving, changing schools, or packing up and going back to the UK.
Many people assume a state pension will fill the gap. In Spain, the widow's or widower's pension depends on the contributions made in Spain: as a general rule it is 52 % of the deceased's contribution base, it has minimum contribution requirements, and unmarried partners have extra registration and income conditions. If you've only worked here a few years, or pay the minimum as an autónomo, it may be far less than you expect, or nothing at all.
Does the policy you brought from home still cover you?
A lot of people we see still pay for a life policy they took out in the UK, Ireland or elsewhere before moving. Some of those policies carry on covering you abroad without any problem. Others have conditions about where you live, or were taken out to cover a mortgage you no longer have.
It's worth getting the policy out and checking three things: whether it still covers you as a resident of Spain, whether the sum assured still matches your life today, and who the beneficiaries are. If any of those answers is “I'm not sure”, bring it in or send it over WhatsApp and we'll go through it with you in English.
What if you don't die, but can't work again?
This is the question almost nobody asks, and it's the one that moves the most money. A motorbike accident, a stroke, an illness that stops you going back to work. You're still here, thank goodness. But so are your bills, and they may go up: adapting the house, treatment, someone to help.
That's why good life cover isn't only about death. Total and permanent disability cover pays the sum to you, while you're alive. Critical illness cover brings part of it forward at diagnosis, exactly when it's needed most. If you live alone and nobody depends on you, this is the part that does apply.
What happens to a Spanish mortgage if you're not here?
The debt doesn't disappear. In Spain the mortgage forms part of the estate, and whoever inherits the property inherits what's left to pay. If your partner can't manage the repayments alone, the options are few and none of them good: a rushed sale, renouncing the inheritance, or leaning on family.
If you got a mortgage here, the bank almost certainly asked you to take out its life policy. Spanish mortgage law (Ley 5/2019) requires the bank to accept an equivalent policy from another insurer, but check first whether your interest rate has a discount tied to the bank's insurance. We explain it on our life insurance page.
Would your family know where to go, and in which language?
Claiming a life policy in Spain happens in Spanish: death certificate, the certificate from the Ministry of Justice's register of life policies (which can only be requested fifteen working days after the death), the policy itself, identity documents. For a family that doesn't speak the language, or that lives in another country, that is a mountain to climb in the worst weeks of their lives.
- Tell them the policy existsTell your partner or whoever will claim it, and keep a copy with your important papers.
- Get the beneficiaries rightBy name, by relationship or by percentage. If you've separated, had a child or remarried, review it. As a general rule the payout goes straight to the beneficiaries and doesn't form part of the estate (article 88 of the Spanish Insurance Contract Act), although Spanish inheritance tax does apply to it.
- Give them an office, not a call centreWhen one of our policies has to be used, the family comes to Av. Juan Carlos I, 20 and we walk them through the paperwork until the money is paid, in English if that's what they speak.
How much cover do you really need?
There's no magic number, and be wary of anyone who gives you one without asking a single question. The amount the bank sets covers the mortgage and little else. The sum we do at the office is simpler and more honest:
- What's owed
- The outstanding mortgage, the car loan, any other debt your family would inherit.
- What it takes to carry on
- The household's fixed costs for the years your family would need to reorganise. With children, until they're independent.
- What you want to protect
- Your children's education, help for your parents, enough breathing space that nobody has to decide in a hurry.
- What you already have
- Savings, other policies, a pension you can count on. That comes off the total: the point isn't to pay for more than you need.
And one more thing that won't wait: the premium is based on your age on the day you sign, and on a health questionnaire that must be answered truthfully. You'll never be younger than today, and while you're healthy that questionnaire is a formality.
You never claim your own life insurance. The people you love most do, on the worst day of their lives. On that day, at least, money shouldn't be one more problem.
If you've read this far
You probably answered yes to at least one of these questions. A name came to mind in the first one, or the sum in the second didn't look good, or you're not sure what your old policy or the bank's one actually covers.
You don't have to decide anything today. You can take the first step: leave us your details or message us on WhatsApp, and in twenty minutes we'll do the numbers with you, in English. If the answer is that you don't need it, we'll tell you just as plainly.
This article is general information about life insurance in Spain and is not personalised legal, tax or financial advice. Cover, exclusions and acceptance depend on each policy and on the health questionnaire. Spanish survivor's pensions depend on each person's contribution record. We cannot advise on policies issued by insurers in other countries beyond helping you read them. As an exclusive agent we work with the products of a single insurer.