Life Insurance in Spain – The Best Cover for Expats

Life insurance provides funds for your family or relatives in the event of your death. Life insurance in Spain is known as Seguro de Vida, and the insurer guarantees to pay your beneficiaries an agreed lump sum. This money can be used for any purpose and should not be subject to inheritance tax. These funds could pay off debts, mortgages, and medical bills if required. If you are the primary breadwinner, can your spouse continue to provide your family the same or similar support while living in Spain? If you were not here to support them, might this necessitate an unwelcome move back to their home country? These situations are why life cover as an Expat is essential.

This article will explore the different types of life insurance, how much coverage is needed, and the cost. Most importantly, we’ll show you how to choose life insurance in Spain.

How to Choose Life Insurance in Spain

Types of Life Insurance

There are two main types of life insurance; Term and Whole Life.

Term Insurance

Term Insurance is the most common plan in Spain and the cheapest available type. As the name suggests, it covers you for a specific period. This period is often the term of your mortgage in Spain. So if you have taken out a 25-year mortgage, this will protect you for that period only. The policy will expire at the end of the term. If you outlive the policy, you will have paid those premiums for nothing more than peace of mind. But, in this case, that is an excellent thing indeed.

Whole Life Insurance

As the name suggests, this will cover you for your whole life. As Oscar Wilde famously said, “There are only two things certain in life, death, and taxes.”. So the life insurance company knows that at some point, they will have to pay out the benefit. For this reason, the premiums can be up to 15 times higher than term insurance.

One significant advantage of Whole Life insurance is that it accumulates cash value during the policy’s length. You can access these funds during your life to provide various benefits.

For example, you can use these funds to:

• Create an investment portfolio.
• Pay your policy premiums.
• Take out a loan at a lower rate than banks offer.
• Supplement retirement income.

Generally speaking, the cash value will only start to accrue for the policy’s first 2 to 5 years. The money is usually invested in a conservative-yield investment. As you continue to pay premiums and earn more interest, the cash value grows over the years.

How Much Cover Do You Need?

There are several ways to calculate how much cover you will need, varying greatly depending on your situation. If you are retiring to Spain, your requirements are different for a student.

You may not need life insurance at all. For example, those with no dependents or sufficient assets to support them in the future.

But if you have people who rely on your income, insurance companies recommend purchasing cover equivalent to 10 times your annual net salary. Another method would be to calculate it based on the years to your retirement. If you have 12 years till you retire, you should purchase 12 times your salary.

Another method of calculating how much cover you need is called DIME (debt, income, mortgage, education). This method will provide the minimum coverage to cover significant expenses. It should cover your outstanding debts (including your mortgage) and replace your salary until your youngest child reaches adulthood.

All these methods try to find a simple financial figure. How much money will you need to leave for those who rely on you?

Our Recommended Spanish Life Insurance Companies

There are many options for your Spanish life insurance. We suggest quotes from several of these companies that cover Expats.

1. Allianz Vida
2. Seguros Vida Mapfre
3. Caser Vida
4. Axa Vida
5. Aegon Vida
6. Ocaso Vida
7. Liberty Vida
8. Zurich Seguros Vida

Note: Some banks in Spain may have specific requirements for life insurance linked to mortgage products.

What Does Life Insurance Cost In Spain

Factors that Influence the cost of your life policy plan

We have already discussed that Whole Life insurance will cost more than Term Insurance and the valid reasons for this. Furthermore, the shorter the term of protection, the lower the premiums will be. This discount is because, once again, the risk of your untimely death occurring while the policy is current increases with a longer term.

Level Of Coverage: The higher the coverage you require, the higher the premiums. Again, the insurer has an increased risk if they have to pay out more in the event of your death.

Age: The younger you are when you start the policy, the less you will pay, as there is less risk of death.

Sex: Males are also charged higher premiums because they die younger than women on average.

Smoking or Vaping: Smokers will also pay higher premiums. You can notify the company to review your premiums if you quit smoking. Generally, you need to have stopped all nicotine products for at least 12 months to be considered a non-smoker.

Health: Your health will also impact your premiums. You may be asked to undergo a health assessment by your insurer. Those with health conditions that may affect their mortality will pay higher premiums than those without health issues.

Lifestyle: Is base jumping or motorcycle racing your idea of letting off steam? Does your job involve dangerous activities? Again, those premiums will increase if your lifestyle and occupation ring alarm bells for the insurance company.

Optional Cover Options Offered with Life Insurance Policies

You can add optional benefits to your life insurance policy at an extra cost. These are often referred to as riders, and the most common are as follows:

Guaranteed insurability: You can purchase additional insurance coverage during the policy without further medical examinations.

Accidental death: The death benefit is increased if the policyholder dies from an accident.

Waiver of premium: Premiums are waived if the insured becomes permanently disabled or loses their income due to injury or illness before a specified age. The eventual payout remains the same.

Family income benefit: This will provide a steady flow of income to family members on the insured’s death.

Accelerated death benefit: The insured can access some of their final payouts if diagnosed with a terminal illness. This early benefit will be deducted from the final settlement on their death.

Long-term care: If the policyholder needs to move to a nursing home or receives home care, monthly payments can cover these costs.

Return of premium riders: This rider refunds the premiums paid if you outlive the policy term.

Summary of Life Insurance in Spain

Death is not a topic we like to talk about. But, when it does happen, good insurance cover makes life much easier for those left behind. We know that moving to a new country makes putting off these types of financial planning tasks easy. We hope our guide has helped you understand life insurance in Spain and why it can be vital. Please reach out for further assistance or contact any of the companies recommended above.