Life Insurance in Spain (seguro de vida)

Spain offers plenty of reasons to feel secure: sunshine, strong community, and excellent social benefits.

But there’s one thing…

When it comes to protecting your family financially in case of your passing, the state’s solutions aren’t enough.

Survivor pensions rarely replace a full salary (especially if you’re earning well), and will not pay off your mortgage.

That’s where Spanish life insurance (seguro de vida) comes in.

With the right policy, your loved ones won’t have to worry about how to pay the bills, cover debts, or keep up with daily expenses if something happens to you.

The best part?

Life insurance in Spain is flexible: you can tailor it to protect your children, your business, or simply cover funeral costs.

In this post you’ll learn:

• What Spanish life insurance (seguro de vida) is and how it works
• Who benefits most
• The main types of coverage
• How much life insurance really costs
• What taxes, inheritance laws, and alternatives you should know about

Let’s dive in.

What is Spanish life insurance?

In Spain, life insurance (also referred to as seguro de vida) ensures that in the event of death, the insurance company pays a selected sum of money to your chosen beneficiaries.

Your beneficiaries can use the financial support for anything. Most commonly, it helps with:

• Final expenses
• Debts
• Childcare
• Education

In many cases, life insurance is also linked to mortgages, ensuring that any outstanding debt is covered and does not fall on your family.

All life insurance policies in Spain are supervised by the Dirección General de Seguros y Fondos de Pensiones (DGSFP), the country’s main insurance regulator. This ensures that life insurance products follow Spanish law and provide clear consumer protection.

Who needs life insurance in Spain?

Life insurance is not only for parents or people with large estates. In Spain, different groups can benefit depending on their situation:

• Parents: Coverage helps with household bills, childcare, extracurricular activities, and future education. For parents with older children, protection may only be needed until they become financially independent.
• Primary earners in the household: If your spouse does not work or their salary cannot manage living costs alone, life insurance can provide security.
• Business owners: Policies can fund ongoing operations or provide “key person insurance” for companies that are dependent on a specific partner or employee.
• Older adults without savings: A small policy can ensure funeral costs are covered without burdening relatives.
• Caregivers and care-receivers: Caregivers can secure continued support, while older adults sometimes use a policy to leave a final financial thank-you.
• Adults with loans: Life insurance can help prevent debt, for example, student loans, from becoming a family burden.

In short, life insurance in Spain is most valuable for people who have others depending on them. You may only need it during the years when your family or dependents rely on your income.

How does life insurance work in Spain?

Life insurance in Spain follows a simple setup:

As the policyholder, you pay regular premiums to the insurer.

In return, the insurer agrees to pay a lump sum (or in some cases, a monthly annuity) to your chosen beneficiaries if you die.

You can name almost anyone as a beneficiary: your spouse, children, partner, or even a friend. However, Spain’s inheritance system (sucesión forzosa) requires that a large part of your estate go to your children (more on that later).

For this reason, it is essential to clearly specify who should receive the insurance payout to avoid potential conflicts with inheritance laws.

Insurers in Spain, like those in other countries, set exclusions that, when triggered, force them to refuse payouts. This varies by insurer, but generally includes:

• suicide within the first 12 months

• pre-existing health conditions not declared on the application

• deaths from high-risk activities such as certain extreme sports

The most common types of Spanish life insurance

Life insurance in Spain comes in several forms, each designed to meet different financial needs and family situations.

Choosing the right one depends on your goals: whether you want simple protection, investment growth, or coverage for funeral costs.

Here’s a brief overview of the most common types:

Term life insurance

Term life insurance covers you for a set time (5–30 years). If you die during that period, your family gets a payout. When the term ends, coverage stops unless you renew.

It’s usually best to choose a term life insurance policy during your working years, when you want to protect debts or ensure your family will have a stable income in the event of your death.

Whole life insurance

Whole life insurance covers you for your entire lifetime.

As long as you pay your premiums, your family will always receive a payout when you die. Many policies also build up a small “cash value” over time.

Whole life insurance is best if you want lifetime coverage and are willing to pay higher premiums for the security of knowing your family will always receive a payout.

Universal life insurance

Universal life insurance gives you lifetime coverage but adds flexibility. You can adjust your premium payments and the size of your death benefit over time. These policies also build a cash value that earns interest.

Universal life insurance is well-suited if you desire lifelong protection and prefer the flexibility to adjust your payments as your financial situation evolves.

Variable life insurance

Variable life insurance also lasts for your whole life, but instead of earning fixed interest, the cash value is invested in funds such as stocks and bonds. This means your savings can grow faster, but they can also lose value.

Variable life insurance is best suited for individuals who desire lifelong coverage and are willing to accept investment risk to potentially accumulate greater wealth.

Burial insurance

Burial insurance (often called final expense insurance) is a small policy meant to cover funeral costs and related expenses. Coverage amounts are typically lower than those of other life insurance types, usually ranging from €3,000 to €10,000.

Burial insurance is a good choice if you only want to make sure your family doesn’t face financial stress when arranging your funeral, without needing broader financial protection.

How to get life insurance in Spain (without overpaying)

Getting life insurance in Spain isn’t rocket science. However, if you choose the wrong provider, you may end up paying 30–50% more than you need to.

When you buy life insurance in Spain, you’ve got three main routes:

• Banks: usually tied to a mortgage. Convenient, but pricey. Expect to pay way more compared to going independent.

• Insurance brokers: Brokers shop around for you. Great if you want tailored coverage without doing the research.

• Direct insurers (aseguradoras): companies such as Feather. You buy online, simple and fast.

What to expect when applying

• Health questionnaire: standard for everyone. Answer honestly, or your contract may be void.

• Medical exam: only if you’re older or asking for (very) high coverage.

• Paperwork: EU citizens can usually apply with just an ID. Non-EU nationals may need a residence permit or proof you live in Spain.

Step-by-step: How to lock in your policy

1. Decide on your coverage. Example: If you have a €200,000 mortgage, match your policy to cover at least that amount.
2. Get at least 2–3 offers. Compare bank, broker, and direct insurer quotes to find the best option for you. Don’t settle for the first policy.
3. Check exclusions: Look for things like “not covered if you move outside of Spain.” That’s a red flag for expats.
4. Fill out your questionnaire carefully: If you hide a health issue, the insurer could deny future claims.

How much does life insurance cost in Spain?

Life insurance premiums vary, but here’s what you can expect if you’re an expat:

• Young adults (like a healthy 30-year-old) might pay around €100–200 per year for €250,000 of term life coverage.

• For middle-aged adults (age ≈50), the same policy can cost three to four times more.

• Savings-linked policies: Some policies bundle insurance with investments or savings products. These are more challenging to price upfront, as fees and market performance come into play.

Banks in Spain often push bundled policies when you open an account or take out a mortgage. These are convenient, but they are usually (much) more expensive than standalone policies from independent providers.

What factors affect life insurance costs?

Several factors influence what you’ll pay in Spain:

• Age and health: The younger and healthier you are, the cheaper your premiums. Pre-existing conditions (like high blood pressure or diabetes) usually increase costs.

• Lifestyle: Smoking, heavy drinking, or high-risk sports (e.g., diving) can raise your rates.

• Occupation: Some occupations are riskier, like jobs in construction, which pushes the rates up.

• Coverage level: The more coverage and the longer the policy term, the higher the price.

• Where you buy: Policies sold through banks often cost more. Independent brokers or online insurers tend to offer better deals.

Practical tips to keep premiums low

The good news is that you can influence what you pay. Here are our favorite ways to save:

1. Apply early: The sooner you buy, the better. Locking in coverage in your 20s or 30s can help you secure the lowest rates before age and health risks begin to take effect.
2. Choose level-term coverage: Instead of renewing yearly, pick a fixed premium for the entire policy term. This avoids annual price hikes and is typically more cost-effective in the long term.
3. Shop around: Don’t just accept the first offer from your Spanish bank. Compare quotes from online insurers and independent brokers.
4. Maintain a healthy lifestyle: Staying active, not smoking, and managing your health will make you a lower-risk applicant.

How much life insurance do expats in Spain really need?

Buying life insurance isn’t just about picking a number at random.

The payout (known as the death benefit) is the money your loved ones would receive if something happened to you.

Here’s why it matters…

Choose too little, and they may struggle financially. Choose too much, and you could end up paying higher premiums than necessary.

So how do you find the sweet spot as an expat in Spain?

Let’s see…

A simple starting point is 5–10 times your annual income. This range is often recommended because it provides several years of financial breathing room for your family.

But if you live in Spain, context matters.

Costs in Madrid or Barcelona are much higher than in smaller towns. So, while 5x income might be fine in rural Galicia, you may want closer to 10x if your family is based in a big city.

What to include in your calculation

Your death benefit should do more than just replace your salary.

Here’s a checklist of what to include in your death benefit:

• Mortgage or rent: Add the outstanding balance of your mortgage or multiply your annual rent by the years you’d like to cover.

• Education costs: Factor in school fees or university tuition. If your children might study abroad, include international costs too.

• Living expenses, including food, transportation, utilities, and healthcare. These all add up. Estimate your family’s monthly needs and multiply them by the number of years you want to secure.

• Expat-specific considerations: Many expats support families back home or have children attending schools abroad. Ensure you account for these expenses in both countries.

Adapt for Spanish rules

Spain has unique inheritance laws, known as sucesión forzosa.

By default, part of your estate must go to your children, which may not always align with your wishes. Life insurance can give you flexibility, especially if you want to ensure your spouse or partner receives additional financial support.

But… What does this means for you?

Let’s find out.

Does Spain tax life insurance payouts?

Yes. If you’re living in Spain, life insurance payouts are taxed under the Spanish Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones).

Two things decide your tax bill:

• Relationship to the insured: spouses and children usually pay little, while distant relatives or friends pay more.

• Region (comunidad autónoma): every region sets its own reductions.

For example, €150,000 paid to a spouse in Madrid could be nearly tax-free. The same amount to a sibling in Catalonia may cost tens of thousands in tax.

If your beneficiary lives outside Spain, they may face double taxation: in Spain and in their home country.

If that applies to you, discuss with a tax advisor or insurance professional.

Alternatives to Spanish life insurance

Life insurance isn’t the only way to protect your family’s future. In Spain, you have other options:

Mortgage protection insurance

A “seguro de amortización de préstamos” covers your mortgage if you pass away. The insurer pays off the outstanding balance, allowing your family to keep the home without worrying about monthly payments.

Good to know: it only clears the loan, not living costs or education. Best used as a complement to life insurance, not a substitute.

Savings plans and pensions

Options like “planes de ahorro” and private pensions let you grow long-term savings.

They’re great for retirement or emergencies, but they take years to build and won’t protect your family immediately if you die young.

Public survivor pensions

Spain’s social security provides pensión de viudedad (for spouses) and pensión de orfandad (for children).

These benefits depend on an individual's contribution history and typically cover only a portion of household expenses.