Mortgage protection insurance Spain — covers your outstanding mortgage balance if you die during the term. Constant capital or decreasing capital options. Generali policies arranged by Turner Insurance Specialists, Jávea. Free English quote — 966 461 625.
What is Mortgage Protection Insurance?
Mortgage protection insurance (seguro de amortización de hipoteca) is a life insurance policy specifically tied to your Spanish mortgage. If you die during the mortgage term, the policy pays out enough to clear the outstanding mortgage balance — ensuring your family keeps the home.
Spanish lenders typically require mortgage protection as a condition of approving a mortgage. However, you are not obliged to take the lender's own policy. You have the right to arrange equivalent cover elsewhere — and Turner Insurance can typically offer significantly better value than bank-arranged policies.
Constant Capital vs Decreasing Capital
Constant Capital (Level Cover)
The sum insured stays fixed throughout the policy term, regardless of how much of the mortgage has been repaid. If you die in year 20 of a 25-year mortgage, your beneficiaries receive the full original sum insured — which may be significantly more than the outstanding balance. The excess provides additional financial security for your family beyond simply paying off the mortgage.
✓ Higher payout than outstanding balance in later years
✓ Provides family with funds beyond just clearing the mortgage
✓ Simpler to understand and plan around
✗ Higher premiums than decreasing capital
Decreasing Capital (Reducing Cover)
The sum insured reduces each year in line with the outstanding mortgage balance. As you repay the mortgage, the cover decreases proportionally. At any point, the payout matches approximately what is owed on the mortgage.
✓ Lower premiums than constant capital
✓ Precisely matches your mortgage obligation
✓ Cost-effective for straightforward mortgage protection
✗ No additional benefit beyond mortgage payoff
✗ Less flexibility if circumstances change
Approximate Premiums — Mortgage Protection Spain
€150,000 mortgage, 20 years, age 35: approx. €18–€28/month (constant) | €12–€18/month (decreasing)
€200,000 mortgage, 20 years, age 40: approx. €28–€42/month (constant) | €18–€28/month (decreasing)
€250,000 mortgage, 20 years, age 45: approx. €45–€65/month (constant) | €28–€42/month (decreasing)
€300,000 mortgage, 15 years, age 50: approx. €65–€95/month (constant) | €42–€62/month (decreasing)
Indicative only. Actual premiums depend on health, smoking status, mortgage amount, term and capital option. Contact Turner Insurance for a personalised quote.
Optional Extras
Double capital — accidental death: Doubles the payout if death results from an accident. Approx. €4–€10/month additional.
Critical illness cover: Pays a lump sum on diagnosis of cancer, heart attack or stroke — enabling the mortgage to be cleared during your lifetime. Approx. €8–€20/month.
Permanent disability: Covers monthly mortgage payments if total permanent disability prevents you from working. Approx. €5–€12/month.
Valencia ISD and Mortgage Protection — What You Need to Know
⚠️ Important Disclaimer
Turner Insurance does not provide tax advice. The information below is a rough guide only, accurate as of 2026. For specific tax planning, consult a qualified gestoría, abogado or tax adviser in Spain.
In the Valencian Community (which includes Jávea, the Costa Blanca and surrounding areas), mortgage protection and life insurance proceeds paid to named beneficiaries are subject to ISD (Impuesto sobre Sucesiones y Donaciones) according to the following general principles:
If You Are a Valencia Resident
Direct descendants (children, grandchildren): Benefit from the highest exemptions in Valencia — up to approximately €100,000 per beneficiary before ISD applies at reduced rates
Spouse: Moderate exemptions apply. Consult a tax adviser for current rates
Siblings, parents, other relatives: Lower exemptions, higher ISD rates
Unrelated beneficiaries: Minimal exemptions, full ISD rates apply
If You Are Not a Valencia Resident
Non-residents are taxed at the national ISD scale rather than the regional scale
This typically means higher effective tax rates than for Valencia residents
Direct beneficiary nomination in the policy (not through a will) still provides some benefit
The Critical Rule — Name Beneficiaries Directly
Whether you are resident or non-resident, the most important step to minimise ISD on life insurance proceeds is to name beneficiaries directly in the policy rather than leaving proceeds to pass through your estate or will. Direct nomination provides the most favourable ISD treatment under Spanish law.
Mortgage protection insurance (seguro de amortización de hipoteca) is a life insurance policy specifically designed to cover your outstanding mortgage balance if you die during the mortgage term. Your beneficiaries receive enough to pay off the mortgage, ensuring the family home is not lost. Spanish lenders typically require mortgage protection as a condition of granting a mortgage, though you are not legally obliged to take the lender's own policy.
Constant capital means the sum insured stays the same throughout the policy term, regardless of how much of the mortgage you have repaid. If you die in year 15 of a 25-year mortgage, your beneficiaries receive the full original sum insured even though the outstanding balance is lower. Decreasing capital means the sum insured reduces each year, tracking your outstanding mortgage balance. As you repay the mortgage, the cover decreases accordingly. Decreasing capital is cheaper but constant capital provides additional benefit beyond the mortgage balance.
For most expats, decreasing capital is the most cost-effective choice since the cover is matched to your actual mortgage obligation at any point in time. Constant capital costs more but provides extra protection — if you die, your beneficiaries receive more than just the mortgage payoff amount, leaving additional funds for living expenses, children's education or other costs. Your choice depends on budget and whether you want the extra benefit constant capital provides.
No — you are not legally required to take your lender's in-house mortgage protection policy. Spanish law gives you the right to arrange mortgage protection with any DGS-registered insurer. Lenders cannot refuse your mortgage because you chose a different insurer, provided the policy meets their minimum requirements (sum insured, term matching the mortgage). Turner Insurance arranges Generali mortgage protection that typically costs significantly less than bank-arranged policies while meeting all lender requirements.
Mortgage protection is a life insurance product — it does not include courtesy car provisions. Courtesy car cover relates to car insurance products. You may be thinking of life insurance optional extras or the Generali E11 car insurance policy which includes courtesy car provisions.
Optional extras for Generali mortgage protection include: double capital in the event of accidental death (doubles the payout if death results from an accident); critical illness cover (pays out a lump sum on diagnosis of serious illness, enabling the mortgage to be repaid during life); permanent disability (covers monthly mortgage payments if you become unable to work due to disability).
If a policyholder with mortgage protection dies, the proceeds are paid to the named beneficiary to cover the mortgage. However, if the proceeds exceed the outstanding mortgage balance (particularly with constant capital policies), the excess is subject to ISD in Valencia at standard rates. In Madrid, direct descendants pay 0% ISD on life insurance proceeds. Proper beneficiary nomination and policy structure can minimise ISD exposure. See our inheritance tax guides for full regional details.
Mortgage protection should last at least as long as your mortgage term. Most policies are arranged to match the mortgage exactly — if your mortgage has 20 years remaining, you take 20-year mortgage protection. Some clients take slightly longer terms (e.g. 25 years) to allow for mortgage extensions or payment holidays. The sum insured should match your outstanding mortgage balance or the original mortgage amount depending on whether you choose decreasing or constant capital.