Life Insurance Spain

Turner Insurance News   •   Dec 21, 2017

costa blanca web design by chrisp design

Life insurance can be a confusing subject for some, so we aim to try and explain what life insurance is, how these insurance policies can cover you in Spain and protect your assets and inheritance. A life insurance policy in Spain is the same as it is in the UK and other countries, a contract between yourself and an insurance company covering a risk, in this case the risk is actually your life, you can also add on cover for your ability to carry out your daily functions (permanent invalidity) and your health (in this case critical illnesses), in exchange for certain agreed benefits, a pay out to your next of kin of an agreed amount, a pay out to the insured in the event of permanent invalidity or critical illness of a separate agreed amount, so in the event the unforeseen happens, you will receive an amount of money to use as you see fit, to cover for extra medical bills or travel to certain hospitals in the event of a critical illness, to cover in home refurbishments, home assistance or whatever was needed in the event of permanent invalidity, or pay out an agreed amount to your next of kin or designated beneficiary, such as a bank, financial institution, specific friend, relative or even a charity if you so wished. This agreed amount paid out in the event of death can serve to cover a loss of income for your spouse, to clear loans or debts, cover inheritance costs or just to make life easy for the beneficiary if something happened.
So continuing on the above, let me explain the breakdown of all parties involved in a life insurance policy, firstly you may take out your policy via an insurance agent or broker in Spain, via a bank or to an insurer directly, you complete an application, confirming the 3 main parties involved in the contract, the policy holder, the insured and the beneficiary, the insured person also has to fill out a health declaration, these may be done verbally / computer but have to be printed and signed by the policy holder, providing the insured has no health conditions the policy is issued and the cover is in force once you have paid the first receipt, according to the insurers policy conditions, that you really should read, along with everything else you are asked to sign. There are a few companies in Spain (not Liberty Seguros) that do not cover death due to a heart attack as a standard cover on their life insurance policies, it is an optional extra or excluded, again this is something you need to be aware of.

30 Days for refund

Once you take out a life insurance policy in Spain you have a 30 day period to cancel and request a refund, this is not the same rule for all insurance policies. Liberty Seguros has just implemented a new system and applications can now also be done verbally over the phone or via the internet, providing the applications are verified via a PIN number sent to a mobile phone.

Things to consider

In Spain when a bank issues an insurance policy they are really just acting as an insurance agent and the person you deal with in your local branch does not always have the experience or knowledge as an insurance agent in Spain as it is not their profession, I was recently forced into taking a small life insurance policy via my bank as I needed some finance and when the clerk asked me to sign a health declaration stating I was 160cmtrs tall and weighed 65 kilos, being 182cmtrs tall and weighing 90 kg I had to protest, that is a typical example of what could happen, if I had signed and passed away, the insurer could correctly declare I had lied on the health declaration and therefor refuse to pay, as a result the debt would be included in my estate and my next of kin would have to pay that debt out of everything else received, if all I had was a mortgaged property and that same situation happened with the life policy for the mortgage, my next of kin would be forced to decide to agree to pay the mortgage themselves or refuse to accept their inheritance in full. Many would blame the insurance company for this, however, the fact would remain that I had signed an incorrect health declaration and the premium I agreed to pay was based on that information, I can’t stress how important it is to make sure your health declaration is 100% correct. Once the insurer receives your health declaration they agree to issue a policy for the agreed amount of cover and are legally obligated to fulfil the clauses stipulated in the policy conditions if your health declaration is incorrect, their legal obligation does not apply.

Key Points

  • 30 Day Period to Cancel

  • Be aware of inexperienced agents

  • Life insurance is not a funeral policy

  • We can issue life insurance for clients up to 69 years

The Application

The application form is equally important and should be read and signed, as that will state who the policyholder is, the person who takes out the policy and pays the premiums, who the insured is, if it is not the policyholder, and who the beneficiary is, a specific benefactor (spouse, a person or company) general next of kin, or a bank or financial entity to cover a loan, you don’t want your insurance agent to declare themselves as the beneficiary on your policy! We always recommend you specify a beneficiary on your life insurance policy in Spain, this will make the settlement of the policy much easier as the beneficiary only needs to provide a death certificate, medical report if needed, proof of who they are and their bank account so the insurer can pay them. If the beneficiary is not specified the policy will pay the next of kin, however, this means dealing with all inheritance matters first, then once the next of kin are identified the insurance company will pay each beneficiary the relevant amount, it will take a lot longer.