No one tells you this until you’re halfway through the mortgage paperwork, but a lot of Spanish banks will make life insurance part of the deal. Sometimes it’s “optional,” but with strings. Sometimes they won’t lend without it.
And no — your UK life insurance policy doesn’t always cut it.
Not always required. But often expected.
Banks aren’t stupid. If they’re lending you €200k on a property in Jávea or Málaga and you drop dead next year, they want the money back. Life insurance is how they cover that risk.
Some banks bake it into the mortgage terms. Others offer a better rate if you take their policy.
If you say no? The mortgage offer may still stand — just with a worse interest rate. Sometimes it doesn’t stand at all.
What kind of policy are we talking about?
This isn’t about inheritance planning. It’s basic term life. Usually just enough to cover the outstanding mortgage balance if you die.
The bank is listed as beneficiary.
You pay monthly or annually.
The premium depends on your age, health, loan amount.
No frills. Just coverage.
Can you shop around?
Yes. You’re not legally required to take the bank’s in-house policy.
You can get quotes from independent providers. Some brokers will even help you write the bank a letter explaining that your external policy meets all legal requirements.
But banks push their own. Hard. They wrap it in the promise of a better interest rate — sometimes 0.2% or 0.3% lower if you bundle services (life cover + home insurance + direct debit salary + credit card… you get the picture).
If you want to compare options, this site’s decent for expat-friendly quotes:
👉 https://www.caserexpatinsurance.com/life-insurance
Can you cancel it later?
Sometimes. But check the small print. Some mortgage terms say the preferential rate only applies if the policy is maintained. Cancel it too early and your interest rate might jump mid-loan.
Also — if you took a multi-year policy and paid it up front (some do this to save), cancelling could mean losing a chunk.
It’s worth asking the bank’s rep about this up front. Get it in writing if you can.
What if you already have UK life insurance?
It depends. If your policy is international and clearly names the mortgage lender or covers foreign debt, the bank might accept it. Usually they won’t.
Most just want a Spanish provider, registered locally, paperwork in Spanish, no translation required. Easier for them. Less admin.
How much does it cost?
For a healthy non-smoker under 50, on a €150k mortgage:
Roughly €200–€400 per year.
More if you’re older, or if the bank rolls it into the mortgage capital (some do — so you end up paying interest on your insurance too, which is cheeky).
Real problems we’ve seen:
- Policy says it pays the bank, not your family — unexpected for some.
- Bank rolls premium into the loan — you forget you’re paying for it.
- You assume it’s optional. It’s not. Deal falls through.
- They quote you €600 a year and you don’t realise you could’ve got it for €200 elsewhere.
Bottom line: You need to know this stuff before the mortgage offer.
Otherwise you’ll be sitting in the notary’s office nodding at paperwork you didn’t read, wondering why your 1.9% fixed rate became 2.4%.
For everything else mortgage-related (terms, documents, rates), see the full breakdown here:
👉 https://dream-horizons.co.uk/spanish-mortgages-for-british-buyers-current-rates-and-rules
