Mortgage Protection Insurance Spain

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. For the full picture, see our guide on whether you need life insurance to get a Spanish mortgage.

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

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.

See our full regional inheritance tax guides including Valencia ISD, Madrid ISD and all other regions. For the rules in your autonomous community, see our Spanish inheritance tax guide — or click here for our life insurance calculator.