What is life insurance and how does it work? What are the protections and exclusions? And why buy life insurance? On this page you will find everything you need to know about taking out life insurance in Portugal.
For most Portuguese or expatriates in Portugal, life insurance is closely linked to home loans. This is simply because a large majority of banks in Portugal require a life insurance policy as collateral for a home loan.
The reason is simple: in the event of death or disability of one of the holders, the debt is repaid without a mortgage. However, the use of life insurance in Portugal can also be linked to a need for protection and prevention, namely to ensure the security of the family’s financial assets (especially if you have children) in the event of death.
Life insurance: English-speaking broker in Portugal
Life insurance policies, comparing them, understanding them and choosing the best life insurance for your needs is already not an easy thing in English speaking countries but it will be even less so in a foreign language that is Portuguese. It is important to let an insurance expert in Portugal be your representative, consult all the offers from the country’s insurance companies and find the one that is the most interesting for you.
If you wish to be accompanied and discuss your project, use the button below and fill in the associated form. This information will enable an English-speaking insurance broker, based in Lisbon, to contact you to discuss your project and how he can best accompany you.
How life insurance works in Portugal
This is insurance where the main coverage is the risk of death or survival (or both) of one or more persons. In some cases, it also guarantees other supplementary cover such as the risk of disability, accident or even unemployment.
When the life insurance covers the risk of death, the insurer pays the agreed capital to the beneficiary (designated by the insured person) if the insured person dies within the period agreed in the contract. This is a type of insurance that is usually linked to mortgage loans.
In the case of life insurance covering the survival of the insured person, the insurer pays the beneficiary (indicated by the insured person) the agreed capital if the insured person is alive at the end of the contract. This type of insurance is usual when opening a savings account. In addition, the beneficiary can even be the insured person himself.
It is also possible to take out life insurance policies that include these two situations.
Portuguese life insurance cover
The broadest life insurance covers death and total and permanent disability: compensation in the event of illness or accident leading to total and permanent inability to carry out one’s usual occupation or any other paid occupation compatible with the individual’s abilities and values.
The degree of incapacity must be greater than 65% and requires the presentation of a medical certificate indicating the causes of the incapacity, as well as a report on the professional activity carried out at the time of the accident. However, it should be noted that these coverages may also increase the insurance premium.
The simplest life insurance policies in Portugal only cover Absolute and Permanent Disability, declared when a person, due to illness or accident, becomes totally unfit to carry out an activity and depends on the assistance of a third person for daily tasks.
Exclusions from life insurance coverage
The main exclusions in life insurance are usually death or disability:
- Suicide (during the first one or two years of the policy)
- Use of alcohol or drugs
- Participation in criminal acts
- Non-commercial aviation accidents and speed sports competitions
- Terrorism or war
- Natural disasters
Life insurance in Portugal and mortgages
Decree-Law No 222/2009 introduced important changes to the regime for the signing of life insurance contracts linked to mortgage loans in Portugal. Emphasis has been placed on the protection of consumer rights, so that the associated conditions do not go beyond the legitimate interest of the banks to protect their interests (i.e. the security of creditors in the event of death or disability of the contracting parties).
Another important point is the possibility for the real estate loan holder to transfer his life insurance policy from one life insurance policy to another during his real estate loan. This allows him to benefit throughout his loan from better life insurance conditions. Be careful, the new insurance must meet the contractual requirements.
Even if the life insurance is not necessary to obtain a housing loan, most banks require it. However, banks cannot force the customer to formalize the life insurance he wants for him. It is up to the customer to choose and banks have an obligation to inform customers that they can transfer the life insurance of the mortgage loan for the duration of the contract.
If you wish to carry out this transfer of life insurance in the event of a mortgage loan, then it is strongly advised to call upon a professional. As a reminder, the button below and the associated form will put you in touch with an insurance professional in Portugal who can serve your best interests. Indeed, in case of transfer you must pay attention to two important things:
- The conditions imposed by the bank and which must be respected by the new insurer.
- Has the possibility, from one insurer to another, of losing a small degree of bonus
Transferring your home loan life insurance step by step
Here are the different stages of the transfer of life insurance in Portugal. All these steps can be done by yourself but will be done by the person accompanying you if you are accompanied.
- Consult an insurance specialist in Portugal, preferably one who speaks English.
- Analyze and compare the guarantees, benefits, premiums and possible penalties of a transfer of your creditor life insurance and other life insurance available on the market.
- To transfer the life insurance to Portugal, notify the former insurer and the bank in writing of your intention to cancel the Portuguese insurance and of your intention to transfer the insurance within 30 days.
- Send a copy of the new insurance policy to the bank when you inform the bank that you are transferring the life insurance on the home loan to another company.
- Cancel the Pre-Authorized Debit authorization for the payment of the previous insurance policy, so that you do not run the risk of having the premiums from the previous insurance policy charged to your account.
Why take out life insurance in Portugal
The main reason is prevention. To prevent economically the consequences of death (the insured capital can compensate for the lack of this income) or survival to a certain age which can lead to (unaffordable) costs for the elderly and/or their relatives, in order to guarantee the necessary care (this care is transferred or shared with the insurer).
Another reason is the taxation of a bank as a guarantee, for example, for a home loan or savings account.
Important questions before subscribing
- What are the characteristics and definition of each coverage?
- How much is the premium for each coverage?
- How is the profit sharing calculated and paid out?
- What is the minimum guaranteed income, the minimum guaranteed interest rate and its duration?
- >What are the surrender, reduction and penalty values?
- What are the fees and the collection schedule?
- What is the existing tax system and tax benefits?
English-speaking life insurance broker Portugal
By validating the contact form, you authorize me to forward your request to an English-speaking insurance broker who will be able to contact you directly. Nothing is automated: they are people I know, based in Lisbon and who are qualified to accompany you in your approach & your project.
Insurance in Portugal
You will find below all the insurances in Portugal for which you can call upon my specialized partner broker:
- Health insurance Portugal
- Motorcycle insurance Portugal
- Home insurance Portugal
- Dental insurance Portugal
- Car insurance Portugal
- Boat insurance Portugal