Life insurance in Spain: Complete guide for expats

Life insurance is intended to offer financial security for people left behind when a policy holder dies. You may want a life insurance policy to make sure your partner or children get some money to help them after your death, or you might want comprehensive life insurance which will cover extras like critical illness or disability.

As an expat your life insurance needs may look a little different to Spanish citizens and permanent residents. Your decisions may be dictated by how long you plan to be in Spain, and the situation your dependents are in during your stay. This guide walks through common Spanish life insurance options so you can decide if one is right for you.

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This guide is for information only and does not constitute advice. Different types of insurance are suitable for different individual needs. Get professional advice and support to choose the right policy for your unique situation.

What is life insurance?

Life insurance is insurance which provides a cash lump sum upon the death of a policy holder. Some policies also cover critical illness or disability which may prevent you from working or limit your life expectancy.

Depending on the policy selected, this may allow you to guarantee that your loved ones will have the financial means to cover funeral costs, continue paying a mortgage, or to relocate to your home country if you’re in Spain as an expat. 

How does life insurance work?

When you take out life insurance you’ll agree to pay fixed premiums – monthly, quarterly or annually – in return for cover based on your policy rules. This is usually in the form of a lump sum paid out to your nominated beneficiaries in the event of your death.

Different types of life insurance are available in Spain to meet the varied needs of customers – this guide walks through some which may be suited to the needs of expats to start your research on which policy is right for you.

Types of life insurance available in Spain

Generally, life insurance policies in Spain are packaged as either a policy with standard cover elements, or a policy with additional coverage which may include extra cover for specific conditions or causes of death, or for disability and serious illness.

The exact policy types available vary by provider, and may have different names. To give an example, the policy options offered by Banco Santander include:

• Essential Protection for your Family – pays a lump sum to beneficiaries upon death of the policy holder
• Family Protection for Women – pays a lump sum to beneficiaries upon death of the policy holder, with additional support for female cancer cases
• Family Protection Plus – pays a lump sum to beneficiaries upon death of the policy holder, and also covers disability and critical illness which prevent the policy holder from working

These policies have different target customers, and offer their own features and fees.

Other providers may describe their insurance policies slightly differently and include different coverage elements, such as accidental death or death in a road traffic accident, but the model of having a standard policy with options to upgrade to add in more coverage is fairly common.

Here’s a look at some of the different common options you may find under each category of policy type.

This guide is for information only and does not constitute advice. Different types of insurance are suitable for different individual needs. Get professional advice and support to choose the right policy for your unique situation.

Standard life insurance

Standard life insurance pays out a lump sum upon the death of the policy holder, for individuals who want to ensure the financial well being of their family in the event of their death. 

Different policy options may be available, which can include term life insurance which is only offered on a fixed period, and whole of life insurance which is intended to be used on an ongoing basis until the policy holder dies. 

The specific pay out mechanisms can also vary. Some policies may pay a fixed amount upon death regardless of how long the policy has been held, while others may have pay out amounts which decrease over time or increase over time to meet the changing needs of the beneficiaries.

This policy type may suit an expat in Spain on a term basis if you’re planning on staying only a fixed amount of time. A whole of life policy may be more suited to expat retiring in Spain or otherwise relocating there permanently.

Standard life insurance pros	Standard life insurance cons
✅ Different policy and payout options depending on individual need ✅ Some policies offer lower premiums with matched cover levels ✅  Choose the term of cover you want – useful if you only need cover while on an expat assignment	❌ Some policies can have very high, or increasing premiums ❌ Premiums usually depend on the age and health of the policy holder

Life insurance with optional additional cover

Life insurance with optional additional cover may be offered under a differently branded policy, or you might find that you can pick additional cover areas to add into your standard policy to offer more comprehensive cover levels.

Optional extras may include specific diseases, such as policies which pay out extra, and offer additional support in the case that the holder gets a disease like cancer. Or they may pay out specific amounts due to different causes of death, such as accidental death or death in a road traffic accident. 

Additional coverage elements may be appealing to expats if you’re looking for a more comprehensive cover or if you have specific lifestyle needs. Check the suitability of individual policies if you plan to move away from Spain in future, as some policies may only pay out to residents.

Additional life insurance pros	Additional life insurance cons
✅ Choose the elements of cover which matter most to you ✅ Offers additional peace of mind ✅  Tailor made policies for different customer needs	❌ Additional costs are likely to apply ❌ Some policies may only apply to permanent residents of Spain

Critical illness or disability insurance

Some life insurance policies include disability or critical illness cover which will pay out either a lump sum or an ongoing amount in the event that the policy holder is unable to work due to illness or disability. This can be part of a life insurance policy which also pays out upon death of the holder or may be an additional element you can choose to add to a standard policy if you want to.

This type of cover may bring additional peace of mind if you’re an expat in Spain working, and need to make sure your family can be provided for if you’re unable to earn. Check what would happen if you need to relocate following an accident or illness before you sign up.

Disability life insurance pros	Disability life insurance cons
✅ Additional peace of mind for people working in Spain ✅ Varying cover levels available ✅  Buy with policy, or add on to a standard policy	❌ Additional costs apply ❌ Policy may not be suitable if you need to relocate after an illness or accident

Life insurance requirements for expats in Spain

Whether or not you can get life insurance coverage in Spain will depend on many factors, including your residency situation, age, health and the type of policy you need.

Residence requirements may apply to life insurance policies in Spain. If you want core products from Caixa Bank, for example, you must be a Spanish resident.

There may also be age rules to think about. To give an example, to take out Banco Santander life insurance you must be 18 – 64 for core policies, with the Essential policy only available to people aged 32 or 42 and over, depending on policy type. 

Finally, it’s common to need to give medical details to open a life insurance policy. You may need to complete a medical questionnaire, complete a medical interview or undergo health checks, depending on the situation. Your suitability for a policy, and the costs, may change based on your health situation.

How much life insurance do you need?

The amount of life insurance you need depends on many factors. You’ll need to consider what value lump sum you would want to pay out, based on the situation your loved ones would be in if you died. 

This is enormously varied. For example, you may have a local or international mortgage which would need to be paid, perhaps your partner has stopped working to support your international move, and would need funds for day to day life, or maybe you’d like to leave extra to cover the costs of repatriation if your family would choose to move home if you were to die. 

When you arrange life insurance in Spain it is almost always necessary to talk through your personal situation with a member of the insurance team to agree the cover and policy which may suit your needs. As part of this conversation, you might want to ask the broker how to calculate life insurance needs in your personal circumstances, so you’ll be confident you’re buying the right policy for you.

Life insurance costs and premiums in Spain

Insurers calculate the premiums payable on a life insurance policy on an individual basis. Factors affecting premium costs include:

• Your age
• Your health
• How long you want the cover for
• The level of cover you need
• Whether you smoke

You will need to talk to an insurance broker to get a few quotes based on your unique information, to get a feel for the premium costs and options you’re likely to have.

Buying life insurance in Spain as an expat

Buying life insurance in Spain as an expat should not be complicated as long as you’re a legal resident and can provide all the documents and information the specific insurer requires. Here’s an outline of the usual process:

Step 1: Decide on the cover and policy type you require

Consider the cover level you need, and the policy type – term insurance or whole of life insurance, for example. Get professional advice if you’re not sure which policy is right for you.

Step 2: Shop around to generate quotes from different providers

Most insurers ask you to give them a call to get an indicative quote for premiums and costs. Or you can use a broker to get quotes for you, to decide the right policy for your family.

Step 3: Apply online, uploading any required documents

You can usually submit your application online, and will be asked to upload documents proving your identity, address and legal residence in Spain. Depending on policy type you may also need to provide health, employment and other information and paperwork.

Step 4: Undergo medical checkups if needed

Some policies will accept your medical information without checkups – others require you to attend an in person appointment to verify your health.

Step 5: Receive your policy document and start paying premiums 

Once your policy is prepared you’ll be sent all the relevant paperwork to review and you can start to pay your premiums.

Employer-provided life insurance

Employer-provided life insurance is a benefit which may be available depending on the country in which your company is based – usually for employees at a management level and above. This provides for a pay out of a fixed lump sum, calculated in reference to your salary, if you were to die in service. Your beneficiaries may get a pay out of 3x your salary, for example, subject to specified terms and conditions. 

Ask your HR department if this is provided in your workplace.

International life insurance vs local coverage

Which is best from international life insurance vs local coverage depends on your situation.

If you already have a life insurance policy in your home country you will need to talk to your insurer to understand what happens when you move overseas.

If you’re looking for a new policy on arrival in Spain, it’s helpful to know that because Spain has a large expat population, there are several insurers which specialise in serving international residents. Take a look at Banco Santander or Generali as good examples, which may also offer English language support. Some Spanish life insurance policies are only offered to Spanish residents, so do make sure the provider you’re looking at is suited to your situation.

Customers who are looking for a policy which can remain open wherever in the world you live, will likely need to talk to a specialist broker and look for offshore insurers which have more flexible residency policies compared to major Spanish insurers.

If you need to pay for life insurance premiums in your home country or in foreign currencies, consider using Wise to make your overseas transfers. Wise offers one off and recurring payments and uses the mid-market exchange rate with low fees, and offers transfers to 140+ countries globally. This can help ensure your recurring bills are paid seamlessly and without excess costs.

Life insurance beneficiaries and international considerations

If you’re an expat in Spain you may want to name individuals in a different country to be your beneficiaries in the case you were to die and your policy pays out. This may or may not be possible, depending on the policy and the country involved.

You may need to take professional advice to check the policy you have selected is suitable for your specific situation. Some important questions to think about include:

• Is naming beneficiaries in different countries possible?
• What are the tax implications for international beneficiaries based on their residency?
• What is the payout procedure if your policy pays out to someone overseas?
• How does currency conversion work if there’s a cross border payment?

If you’ve received a payment which you need to move overseas, choosing a provider like Wise can help mitigate some of the concerns about managing money across currencies. You can send payments with the mid-market rate, or receive and hold payouts in 8+ currencies without needing to convert unnecessarily, in a Wise account.

Life insurance when moving countries

Life insurance providers set their own rules about policy eligibility, which may include requiring Spanish residence. If you’re moving from Spain to another country and have an active life insurance policy here, you’ll need to check with your insurer if you can maintain your policy from another country. If not, you may need to close it and open a new one once you relocate.

Tax implications of life insurance in Spain

As tax matters can be complex – and get even more complicated when dealing with different countries – you will need to get professional advice about the potential tax implications of life insurance in Spain in your situation.

Depending on the policy you have and its intent, as well as your home country’s rules on taxation on insurance, you may find there are steps you can take to limit your tax exposure.

Life insurance and estate planning

Spain has inheritance tax which is payable by beneficiaries of a will upon the death of a loved one. This means that you’ll need to get tax advice on managing your own assets if you’re planning your own estate, including life insurance. Similarly, if you’re inherited assets in Spain which may include a life insurance pay out, you’ll need to get tax advice to ensure you pay and report correctly.

Planning and management of international assets including insurance lump sums could involve large international transactions. If you need to move a large payment overseas, Wise could help, with high transfer limits (usually around 1m GBP or equivalent), transfer fees which get lower when you send over 20,000 GBP, the mid-market exchange rate and a dedicated customer support team for large transfers.

Common life insurance mistakes to avoid for expats

Before you decide on the policy for you, consider these common life insurance mistakes to avoid for expats:

• Choosing the wrong policy type for expat lifestyle – not all policies are right for people living overseas. Get professional advice when you choose
• Underinsuring – bear in mind that your dependents may have different needs while you’re living internationally, and you may want to raise your lump sum accordingly, to pay for relocation for example
• Underestimating currency costs – fluctuations in currency rates could mean you have not selected a policy which matches your needs 
• Failing to update beneficiaries after moves – make sure your insurer has your most up to date information at all times
• Letting coverage lapse during relocations – check if your policy is valid after a planned move, and make sure you continue with premiums if it is

Life insurance claims process

If a loved one dies and you need to submit a life insurance claim, you’ll first need to get in touch with the insurer to report their death. To make the process easier you may need to find the policy number, and you can check the additional information the insurer needs when you speak to their service team. 

Usually you will be asked to submit a death certificate upon receipt and other relevant paperwork like your own ID documents. Once a claim has been approved it will be paid out according to the policy type.

Getting professional advice in Spain

Before you choose a life insurance policy in Spain you’ll need to invest some time in research, including getting professional support from qualified individuals who understand your own needs and the Spanish insurance market.

You’ll be able to get quotes and individual advice from insurance providers, or from brokers which work with many different insurers. You can also look for online or word of mouth recommendations of individual brokers, and compare the options available to you to decide which is the best fit.

Life insurance companies in Spain

Ultimately, the best life insurance plan and company will vary depending on each person’s needs.

To start your research, here are some life insurance companies in Spain you may want to look into:

• Banco Santander
• Generali
• Vida Caixa
• Banco Sabadell

* Companies selected to represent providers with a broad range of policy options suited to varying customer needs

Conclusion

Life insurance can offer peace of mind that your loved ones will be protected if you were to die. Choosing the right policy as an expat might take a little research as you’ll need to get familiar with the options available, and also think about the cover you need in your own unique situation. This guide walks through some basics of the types of policy available – and you can also get professional advice through a broker to help you choose the right service for your needs.

If you’ve received a lump sum payment which you need to repatriate or convert to a different currency, remember you can make high value payments from Spain, to 140+ countries, with Wise. Wise uses the mid-market rate with no markup to worry about, and  fee discounts on high value payments over 20,000 GBP. This helps with making the process to transfer overseas simple and convenient.

FAQ Section

Is life insurance tax deductible?

Tax can be a complex area, so you’ll need to get professional advice based on your individual situation to understand if any element of your life insurance may be tax deductible in Spain.

How much should life insurance cost?

Insurers calculate the premiums payable on a life insurance policy on an individual basis. Factors affecting premium costs include age, health, and level of cover. Talk to an insurance broker to get a few quotes based on your unique information, to get a feel for the premium costs and options you’re likely to have.

What is a life insurance beneficiary?

A life insurance beneficiary is the individual who receives a pay out upon the death of a life insurance policy holder.

What is the difference between term and permanent life insurance?

Term life insurance is usually only offered for a fixed period, while permanent or whole of life cover is meant to be held on an ongoing basis until the death of the policy holder.

How to get life insurance?

You can get life insurance from many banks and brokers. There are some which specialise in expat requirements which can be especially helpful, such as Generali.