Mortgage life insurance: what to compare before switching

First, understand what the bank requires

Life insurance is not a general legal requirement for obtaining a mortgage in Portugal, although the lender may require it as security. According to Banco de Portugal, where it is required you may choose the provider; the policy must provide a level of guarantee equivalent to that proposed by the bank.

Ask the bank for its specific requirements: people to insure, sum insured, beneficiary and required covers. This list lets you assess alternatives on a common basis instead of comparing only the monthly price shown in an advertisement.

Sources: Banco de Portugal — Frequently asked questions about credit ↗ · Banco de Portugal — Taking out a mortgage ↗

The disability definition makes a difference

In a protection policy, death cover may be accompanied by additional disability covers. Product names alone do not establish that two contracts are equivalent. Read what triggers payment, the exclusions and applicable conditions.

Set aside a line for each comparison question: what incapacity is covered? How is it assessed? Until what age does each cover continue? Are there exclusions or waiting periods? Ask for the answer to identify the relevant clause.

Sources: ASF — Life insurance ↗

Calculate the combined cost

The loan agreement may offer a reduction in the interest rate margin linked to keeping other products. Before switching insurance, ask for a mortgage illustration with and without the applicable discount. The outcome depends on your agreement, not a universal savings rule.

Example created to explain the comparison: an alternative reduces the premium by €18 a month, but the change in loan terms would add €11. The initial difference would be €7 a month, before other costs and future changes. These figures are fictional and are not a quotation.

Use the same date, sum insured and group of insured persons in both quotations. Also retain payment frequency and information on how the premium may change.

Sources: Banco de Portugal — Rights and duties when taking out credit ↗

Prepare the replacement without gaps in timing

Gather the current policy, outstanding loan balance and bank requirements. Ask for written confirmation of the new policy’s acceptance and suitability for the finance, its start date and the procedure for ending the previous policy.

Answer the insurer’s questionnaire accurately. At first contact through this website, do not send clinical reports or identity documents: the intermediary will indicate the appropriate channel if they are needed.

The useful decision may be to switch, adjust the existing policy or keep the current arrangement. The purpose of the assessment is to understand the differences and decide with enough information.