Insurance Spain

Life insurance, also commonly referred to as life assurance is not a subject many of us like to think about. We don’t like to think we are going to die but of course we all do, so in examining life insurance in Spain we are being very unselfish and thinking of others – our loved ones.

This article on life insurance in Spain (also known as life assurance) is designed to help you get the lowest and cheapest quote for your life insurance. If you are considering taking out life insurance and you want to find out how much life insurance in Spain costs then read on and we will give you real-life examples.

What is Life Insurance in Spain?

A life insurance contract (or policy) is known in Spain as Seguro de Vida. You are known as the insured and the company you pay premiums to are known as the insurer. In return for these premiums upon your death the insurer gaurantees to pay your beneficiaries an agreed lump sum. This enables them to be looked after financially upon your death. A good life insurance policy (known in Spain as póliza) for Spain will help ease the financial burden for your relatives in the event of your death. Of course if you have few dependants or your relatives are able to support themselves financially then you don’t need to take out life cover.

How to Get the Cheapest Life Insurance Cover in Spain:

In this very critical and important decision you must also be aware that the contents of the policy are vital and you should not choose a policy on price alone. Picking the cheapest life insurance quote may save you money but surely will pay out less and give less benefits to those who you are setting the policy up for.

Try going to an insurance broker who will be able to compare quotations from many different providers of life insurance as this will potentially save you enormous amounts of time (as well as money) contacting each insurance company directly yourself.

Try also find a life insurance price comparison search engine which will take your specifications and instantly search online and compare prices for the cheapest life insurance on the market. Always shop around as life insurance in Spain is generally expensive.

Why life insurance is so important for expats and people living in Spain:

The reality of life in Spain for most expatriates is that to survive financially most people need to start their own businesses as jobs and employment contracts are hard to come by and are typically very low paid with long working hours. If one of you were to pass away, could the business – and therefore the income continue?

Another typical scenario for expats in Spain is that the husband or man is a tradesman such as builder or plumber. In this case should he die then clearly the wife or surviving partner would not be able to earn money and a living doing the same line of work.

Here are some of the main reasons to consider taking out life insurance or life assurance in Spain:

• The key reason to take out life assurance is so that the income you provide for others is maintained. An adequate level of life insurance is designed to provide financial support for surviving dependants on the death of the policyholder. Being an expat and making a living in Spain is harder than many other countries and your dependants may not have the same financial skills, capabilities or qualifications as you. Would they be able to continue living in Spain or would they need to return to their home country if you were not providing the main source of income for your family?
• Any outstanding debts you have will also most likely be paid off in full, these include probably your biggest debt – your mortgage but also any credit card debts and other loans. If you have a partner, family or business partner who would suffer financially when you die then consider life insurance to clear your obligations, debts and to provide a cash lump sum to alleviate any possible financial distress.
• Life assurance can pay for your funeral expenses or cremation costs, perhaps you wish to be buried in another country other than Spain, this will incur a considerable expense at the worst possible time for your relatives, spouse or children.

Now you have decided life insurance is worth considering, let us look at the two main types of life insurance for Spain.

Term life insurance is the most basic level of cover available i.e. the cheapest. Most people take out term life insurance.

Under a term life policy there is a pay out should the policy holder die. Annual premiums are paid for a fixed length of time. Once this fixed length of time runs out or expires then the policy is over and nothing is paid out. Most term life policies will lock you in for a block period of five or ten years. It might look suspicious if you just wanted to take out a policy for a short time such as a year!

This type of life assurance is useful in the short-term. Maybe you anticipate reaching pensionable age in which case your financial obligations will change and a regular income will be guaranteed then.

Perhaps you need term life assurance because your children are in the private school system in Spain and at a certain age this will no longer be necessary therefore dramatically lowering your outgoings. Also they will then be able to find work and employment themselves then and so will be able to support themselves.

Whole of life insurance, also know as permanent life insurance is a life insurance policy that continues right the way through the policyholder’s life meaning a payout is certain to happen. Because of this naturally the premiums are higher than those on term life policies.

Clearly a whole life policy is a major financial commitment as there is no point paying annual premiums for many years and then not being able to keep up the payments and thereby losing your cover.

What type of life insurance cover is best for me?

This is a  question that only you can answer depending on your own unique, individual circumstances.

Firstly consider the alternative to life assurance – saving yourself. This does of course require tremendous self-disciple but the principle is sound. You could save a lump sum in the event of of death. This could be in the form of a bank account paying interest or you could invest a proportion into stocks and shares to potentially provide a higher return. 

The benefit of taking out a life insurance policy is that it makes you commit to the policy whereas if you have money in a bank account it can often be spent whenever a financial demand comes up or you sucumb to temptation!

Do take into consideration your language skills. If you are not fluent in Spanish then it is important to take out life insurance with policy documents issued in English. Otherwise  you won’t fully understand what you are covered for. Don’t take the agent or brokers verbal explanation as when it comes to claiming on your life insurance you will be the one footing the bill if you find you are not properly covered. So check the small print and ask questions until you are 100% sure the policy if what you want.

Exclusions for life insurance in Spain:

Be careful not to nullify your contact or policy. The premiums you pay towards your life insurance can be considerable so it would be silly to void your contact. This can happen if the insured commits suicide, most life companies will consider that you took the policy out in order to collect on the life insurance policy. Another reason could be if you are considered to have lied or made false statements on your original application, this is most relevant when it comes to your health and the answers you have given about the state of your health and medical condition. It is best to be honest when you make your application. Also be careful to keep up your payments as if you fail to pay or get behind your policy will become invalid.