Frequently asked questions about Life insurance in Spain.
Why do I need life cover?
Well, if you are looking at our website you are probably already thinking you might have a need for life insurance in Spain. You have already begun to think about the consequences, should you, or your partner pass away. If you have a family then how would they cope financially if you were to die? Naturally they would have the grief to deal with but what if they also found they couldn't afford the mortgage, the car loan, credit card bill or just general living expenses. At a terrible time none of us would want to put our families through this. For a relatively small sum you can ensure that at least this is one thing they do not have to worry about. Life insurance in Spain does not have to be expensive.
How do I calculate how much I need?
In an ideal world we would like to ensure our loved ones had no financial worries if anything happened to us. Whilst we all want to ensure our family are looked after we also need to keep the cost realistic, especially as we are currently living and wanting to enjoy our lives. The things you need to consider are: the cost of a funeral, what debts would have to be paid if a tragedy happened tomorrow, are there any large bills outstanding? How much would your partner and family need to live on and how long would it take them to get back some financial stability? With one less adult finding additional hours of work might just be impractical, especially if your family is young. You also need to take into account what assets you have. Do you have existing life cover or does your employer have a death in service benefit? Is this sufficient to cover debts such as the mortgage and provide cover for ongoing expenses? Do you have assets such as a second home the family could realise? What about investments, shares, savings, bonds etc? Then work out what would the surviving partner be left with? The house? Enough money to cover living expenses for a reasonable period of time? Cover for all outstanding debts? This should then give you an idea of what amount of life cover you should be seeking.
I rely financially on another person. Can I take life cover out on them?
Yes you can. The law on life insurance in Spain states there must be an insurable risk. This could be because you have a financial reliance on them which includes business partners. You can take life cover on your working or non-working partner. Just because one of you is not earning shouldn't be dismissed. Let's say one of you is earning and the other is a housewife or house husband. If the earner were to die this could have a serious impact on your ability to meet everyday expenses which may include a mortgage. Alternatively a working person might feel they do not need life cover on a non-working partner because they are the one working. Well, if the non-working person is raising the family and the non-worker passes away who looks after the children? There would be either child minding expenses, including time spent dropping them off and collecting them (and would the times fit well with work) or perhaps a need for the earner to reduce their hours of employment to drop off and pick children up from school. This will reduce the earners income and it could be considerable. Whilst we would hope most employers would be sympathetic how flexible would the employer be in the long term?
Can I take cover out to cover serious illness?
Yes, of course. This is an optional extra on most policies and is available when taking life insurance in Spain. It covers a range of serious illnesses and you should check what is covered. The benefit is that it generally pays out on diagnosis of a serious illness rather than waiting for the insured to pass away. Whilst the life element is of great importance this cover has the benefit of paying out when you need the funds. Although seriously ill you can avoid worrying how the family will cope financially. This is important cover for everyone but especially so if perhaps you have no dependents to benefit from life cover. It could mean you have money available to adapt your home to include facilities you will need with this illness or aid with moving to a more suitable property or cover ongoing medical treatment costs.
I don't have anyone financially dependent do I need life cover?
Probably not but you should seriously consider serious illness cover. If you were diagnosed with a serious illness but not pass away then how would you cope financially. You may not be able to work but have a mortgage or bills to pay. You may need to move house, pay for treatment or adapt your existing property to make your life as comfortable as possible. You may become a financial burden on others within your extended family. This type of cover could provide you with a sum of money to make life just a little easier.
How is the premium calculated?
There are many factors that affect the cost of cover. A few that are included are, your age, gender, your medical history, the result of a medical (if required), the work you do and the level of risk this puts you in, your lifestyle (smoking and drinking habits) and of course the competition from other insurance companies in Spain.
Can I pay the premium in installments?
Yes. There is a lot of flexibility in paying for these types of policies. It depends on the level of premium and the actual policy taken but it could be you can choose to pay annually, half-yearly, quarterly or monthly. You need to be aware, however, that all life insurance policies in Spain are a twelve month contractual commitment and automatically renewable unless either party gives notice in writing. The notice period is normally two months before the renewal date. What this means is that if you want to cancel then write in at least two months before the renewal date. (They need an original signature and email or fax is normally not sufficient). It also means that if the insurer allows you to pay in installments you must remember you are obliged to pay all of the installments as they have made a 12 month commitment to provide you with life insurance in Spain. You cannot decide that after four months you do not want to pay anymore. They have a legal right to ask you for the remaining payments.
How long can I take the policy out for?
This depends on the policy you are taking and the insurance company you take it with. In respect of life cover in Spain you can normally have the policy until age 70. There are special policies available for people who are 70 or over. Obviously the risk to the insurance company is significantly higher the older we are but most of us will have met our financial commitments by the time we are 70 and therefore this might be reflected in the amount of cover we are looking for.
Do I get anything back at the end?
If you take straight life cover then the answer is no. Some policies might have an investment value but these will generally be more expensive as part of the premium is used to cover the life risk and part is invested to provide a return to the client. You should think about why you are taking the policy. No one really wants to think about dying but a life policy is to provide for those we leave behind and to ensure they won't end up having to leave the family home or struggling financially. If you want an investment element then you might want to think about life cover plus a separate investment vehicle or perhaps if you are single/have no dependents a product covering serious illness and a product for investment/saving.
What if the person insured dies shortly after taking the policy?
Life cover is a contract to cover the insured whether the death occurs shortly after the policy or shortly before it expires. This should be checked in the terms and conditions of any policy you are looking to take and may be called a qualifying period. In many cases full cover is provided from receipt of the initial premium and it is just the chance the insurer takes. There will be times when a person passes away shortly after taking the contract or in the case of taking serious illness cover is diagnosed with an illness included in the cover. In these cases the insurer is liable to pay. The exceptions would be where the terms and conditions included a qualifying period, the premium is unpaid or a client willfully misled the insurer in a medical questionnaire, for example, making a false declaration about their health when perhaps they knew they had had treatment for something.
If I take a policy that has an investment element is there any risk to the value of my contributions?
This depends on the type of investment. Some will provide a guaranteed return. You should ask what the guaranteed return is before you contract any policy so you can assess if it is a reasonable investment or not. There may be the potential of receiving slightly more than the guaranteed minimum but not less. Of course there are also policies with various degrees of risk which expose you to national and/or international stock markets. Those types of policies could provide you with potentially higher returns but also with higher losses. Before making any investment agreement you should always seek independent advice.
What if my circumstances change can I adjust the cover?
All policies are twelve month contracts. If you pay by installments then you will be obliged to make all the installments regardless if your financial circumstances change during the twelve month renewable contract period. If you take on an additional loan and wish to increase your Spanish life cover you can either take out a new policy for the difference or upon renewal enquire how much extra it would cost to include the new borrowing or other change in circumstance. It could be of course that you come into some money and pay off some of your borrowings. Within the existing twelve month period you cannot reduce your cover and if paying by installments you will have to honor those. However, a minimum of two months before renewal you can ask for the cover to be amended to reflect any adjustment downwards you feel is appropriate. Please check with the individual insurer.
I’ve already got life cover in the UK. Do I have to cancel it now I live in Spain?
This depends on the company you are with and we cannot possible know the terms and conditions of each individual insurer. What we can say is some companies insist that you must continue to be a resident in the UK to retain the cover whereas others will inform you that as long as you were resident in the UK when you took it out and you continue to make the contributions they will continue to provide you with the insurance cover. You will need to speak to the company(ies) you have the insurance with or your financial adviser and clarify the matter with them.
I was ill a few years back should I say anything if I am asked to complete a medical questionnaire?
Yes. The medical questionnaire (if required) forms part of the legal contract. The insurance assessors look at all the information you provide. They will decide whether the premium in any quotation given needs to be adjusted or not. If it does need adjusting then that is because they feel the risk is greater than allowed for in the original quotation. You will not be obliged to accept any adjustment and can refuse to accept the terms of the policy. However, if you do not include something that the insurance company feels may have meant they would have refused to insure you or that the premiums for the cover would have been increased they may decide not to pay the beneficiaries in the event of a claim. Their argument could be either they would have refused to have provided the cover in the first place if they had known or the premiums would have been higher. This then means the cover you have taken may have been a waste of time and money. The best thing is to answer the questions as honestly as possible. This will mean you pay the right premium and the insurer is fully aware of any risks. If they agree to provide the cover to you then you can rest easy knowing there will not be any nasty surprises for your loved ones.
I have a mortgage with the bank. The life cover is expensive. Is it true I must have life cover through their provider?
No. In most cases this is actually illegal. The government passed a law specifically to stop this type of customer abuse. Immediately the banks looked at ways to get round this and if you have a newer mortgage with life cover through the bank you may be stuck with it but it is still worth checking. In the majority of cases, whilst the bank has a right to insist you have life cover in Spain, they cannot insist you have it with their provider. Don't be afraid some of them may need reminding of the law! If your bank manager insists you cannot change provider then please check with a lawyer as some bank managers are a bit over zealous at protecting the life business regardless of the law. We recommend you use an independent lawyer to verify this for you and not necessarily the one the bank or estate agent introduced you to.
Why do I need life cover?
Well, if you are looking at our website you are probably already thinking you might have a need for life insurance in Spain. You have already begun to think about the consequences, should you, or your partner pass away. If you have a family then how would they cope financially if you were to die? Naturally they would have the grief to deal with but what if they also found they couldn't afford the mortgage, the car loan, credit card bill or just general living expenses. At a terrible time none of us would want to put our families through this. For a relatively small sum you can ensure that at least this is one thing they do not have to worry about. Life insurance in Spain does not have to be expensive.
How do I calculate how much I need?
In an ideal world we would like to ensure our loved ones had no financial worries if anything happened to us. Whilst we all want to ensure our family are looked after we also need to keep the cost realistic, especially as we are currently living and wanting to enjoy our lives. The things you need to consider are: the cost of a funeral, what debts would have to be paid if a tragedy happened tomorrow, are there any large bills outstanding? How much would your partner and family need to live on and how long would it take them to get back some financial stability? With one less adult finding additional hours of work might just be impractical, especially if your family is young. You also need to take into account what assets you have. Do you have existing life cover or does your employer have a death in service benefit? Is this sufficient to cover debts such as the mortgage and provide cover for ongoing expenses? Do you have assets such as a second home the family could realise? What about investments, shares, savings, bonds etc? Then work out what would the surviving partner be left with? The house? Enough money to cover living expenses for a reasonable period of time? Cover for all outstanding debts? This should then give you an idea of what amount of life cover you should be seeking.
I rely financially on another person. Can I take life cover out on them?
Yes you can. The law on life insurance in Spain states there must be an insurable risk. This could be because you have a financial reliance on them which includes business partners. You can take life cover on your working or non-working partner. Just because one of you is not earning shouldn't be dismissed. Let's say one of you is earning and the other is a housewife or house husband. If the earner were to die this could have a serious impact on your ability to meet everyday expenses which may include a mortgage. Alternatively a working person might feel they do not need life cover on a non-working partner because they are the one working. Well, if the non-working person is raising the family and the non-worker passes away who looks after the children? There would be either child minding expenses, including time spent dropping them off and collecting them (and would the times fit well with work) or perhaps a need for the earner to reduce their hours of employment to drop off and pick children up from school. This will reduce the earners income and it could be considerable. Whilst we would hope most employers would be sympathetic how flexible would the employer be in the long term?
Can I take cover out to cover serious illness?
Yes, of course. This is an optional extra on most policies and is available when taking life insurance in Spain. It covers a range of serious illnesses and you should check what is covered. The benefit is that it generally pays out on diagnosis of a serious illness rather than waiting for the insured to pass away. Whilst the life element is of great importance this cover has the benefit of paying out when you need the funds. Although seriously ill you can avoid worrying how the family will cope financially. This is important cover for everyone but especially so if perhaps you have no dependents to benefit from life cover. It could mean you have money available to adapt your home to include facilities you will need with this illness or aid with moving to a more suitable property or cover ongoing medical treatment costs.
I don't have anyone financially dependent do I need life cover?
Probably not but you should seriously consider serious illness cover. If you were diagnosed with a serious illness but not pass away then how would you cope financially. You may not be able to work but have a mortgage or bills to pay. You may need to move house, pay for treatment or adapt your existing property to make your life as comfortable as possible. You may become a financial burden on others within your extended family. This type of cover could provide you with a sum of money to make life just a little easier.
How is the premium calculated?
There are many factors that affect the cost of cover. A few that are included are, your age, gender, your medical history, the result of a medical (if required), the work you do and the level of risk this puts you in, your lifestyle (smoking and drinking habits) and of course the competition from other insurance companies in Spain.
Can I pay the premium in installments?
Yes. There is a lot of flexibility in paying for these types of policies. It depends on the level of premium and the actual policy taken but it could be you can choose to pay annually, half-yearly, quarterly or monthly. You need to be aware, however, that all life insurance policies in Spain are a twelve month contractual commitment and automatically renewable unless either party gives notice in writing. The notice period is normally two months before the renewal date. What this means is that if you want to cancel then write in at least two months before the renewal date. (They need an original signature and email or fax is normally not sufficient). It also means that if the insurer allows you to pay in installments you must remember you are obliged to pay all of the installments as they have made a 12 month commitment to provide you with life insurance in Spain. You cannot decide that after four months you do not want to pay anymore. They have a legal right to ask you for the remaining payments.
How long can I take the policy out for?
This depends on the policy you are taking and the insurance company you take it with. In respect of life cover in Spain you can normally have the policy until age 70. There are special policies available for people who are 70 or over. Obviously the risk to the insurance company is significantly higher the older we are but most of us will have met our financial commitments by the time we are 70 and therefore this might be reflected in the amount of cover we are looking for.
Do I get anything back at the end?
If you take straight life cover then the answer is no. Some policies might have an investment value but these will generally be more expensive as part of the premium is used to cover the life risk and part is invested to provide a return to the client. You should think about why you are taking the policy. No one really wants to think about dying but a life policy is to provide for those we leave behind and to ensure they won't end up having to leave the family home or struggling financially. If you want an investment element then you might want to think about life cover plus a separate investment vehicle or perhaps if you are single/have no dependents a product covering serious illness and a product for investment/saving.
What if the person insured dies shortly after taking the policy?
Life cover is a contract to cover the insured whether the death occurs shortly after the policy or shortly before it expires. This should be checked in the terms and conditions of any policy you are looking to take and may be called a qualifying period. In many cases full cover is provided from receipt of the initial premium and it is just the chance the insurer takes. There will be times when a person passes away shortly after taking the contract or in the case of taking serious illness cover is diagnosed with an illness included in the cover. In these cases the insurer is liable to pay. The exceptions would be where the terms and conditions included a qualifying period, the premium is unpaid or a client willfully misled the insurer in a medical questionnaire, for example, making a false declaration about their health when perhaps they knew they had had treatment for something.
If I take a policy that has an investment element is there any risk to the value of my contributions?
This depends on the type of investment. Some will provide a guaranteed return. You should ask what the guaranteed return is before you contract any policy so you can assess if it is a reasonable investment or not. There may be the potential of receiving slightly more than the guaranteed minimum but not less. Of course there are also policies with various degrees of risk which expose you to national and/or international stock markets. Those types of policies could provide you with potentially higher returns but also with higher losses. Before making any investment agreement you should always seek independent advice.
What if my circumstances change can I adjust the cover?
All policies are twelve month contracts. If you pay by installments then you will be obliged to make all the installments regardless if your financial circumstances change during the twelve month renewable contract period. If you take on an additional loan and wish to increase your Spanish life cover you can either take out a new policy for the difference or upon renewal enquire how much extra it would cost to include the new borrowing or other change in circumstance. It could be of course that you come into some money and pay off some of your borrowings. Within the existing twelve month period you cannot reduce your cover and if paying by installments you will have to honor those. However, a minimum of two months before renewal you can ask for the cover to be amended to reflect any adjustment downwards you feel is appropriate. Please check with the individual insurer.
I’ve already got life cover in the UK. Do I have to cancel it now I live in Spain?
This depends on the company you are with and we cannot possible know the terms and conditions of each individual insurer. What we can say is some companies insist that you must continue to be a resident in the UK to retain the cover whereas others will inform you that as long as you were resident in the UK when you took it out and you continue to make the contributions they will continue to provide you with the insurance cover. You will need to speak to the company(ies) you have the insurance with or your financial adviser and clarify the matter with them.
I was ill a few years back should I say anything if I am asked to complete a medical questionnaire?
Yes. The medical questionnaire (if required) forms part of the legal contract. The insurance assessors look at all the information you provide. They will decide whether the premium in any quotation given needs to be adjusted or not. If it does need adjusting then that is because they feel the risk is greater than allowed for in the original quotation. You will not be obliged to accept any adjustment and can refuse to accept the terms of the policy. However, if you do not include something that the insurance company feels may have meant they would have refused to insure you or that the premiums for the cover would have been increased they may decide not to pay the beneficiaries in the event of a claim. Their argument could be either they would have refused to have provided the cover in the first place if they had known or the premiums would have been higher. This then means the cover you have taken may have been a waste of time and money. The best thing is to answer the questions as honestly as possible. This will mean you pay the right premium and the insurer is fully aware of any risks. If they agree to provide the cover to you then you can rest easy knowing there will not be any nasty surprises for your loved ones.
I have a mortgage with the bank. The life cover is expensive. Is it true I must have life cover through their provider?
No. In most cases this is actually illegal. The government passed a law specifically to stop this type of customer abuse. Immediately the banks looked at ways to get round this and if you have a newer mortgage with life cover through the bank you may be stuck with it but it is still worth checking. In the majority of cases, whilst the bank has a right to insist you have life cover in Spain, they cannot insist you have it with their provider. Don't be afraid some of them may need reminding of the law! If your bank manager insists you cannot change provider then please check with a lawyer as some bank managers are a bit over zealous at protecting the life business regardless of the law. We recommend you use an independent lawyer to verify this for you and not necessarily the one the bank or estate agent introduced you to.
