There are 3 main types of life insurance in Spain which are outlined below:
- Annual renewable: A form of term life insurance that offers a guarantee of future insurability for a set period of years, although premiums are paid every year on the basis of a one-year contract. As such, the premiums will rise over time as the insured person ages. This type of insurance is designed for short-term insurance needs and prices are set very competitively
- Term life insurance: This provides coverage for a specified period of time – the term of the policy. This term typically ranges from 5-30 years. After the term, you may renew your policy with a premium adjusted for your health and age. Your policy is paid out only upon death within duration of the term. Term life insurance is not that common in Spain and has to be negotiated with the insurer on a individual basis.
- Decreasing term insurance: Is generally sold with a level premium and a decreasing death benefit. One common use of decreasing term is mortgage life insurance – designed to decrease at the same rate that your mortgage balance decreases. These types of policies are often offered as riders in connection with whole and universal life policies, with the whole or universal life policy providing the “backbone” of your overall protection plan.