What types of life insurance are there? An honest guide for 2026

If you are looking for a list of products with attractive names and feature bullets, hundreds of articles do exactly that. This is not one of them.

Here you will find an honest explanation of the different types of life insurance available in Spain, what each one is really for and, just as importantly, when taking it out does not make sense. That includes the part banks and large insurers would rather you did not read.

There are two broad families: risk insurance, which protects against death or disability, and savings insurance, which builds capital over the long term.

• Term life insurance: The most common type. It covers a defined period—10, 20 or 30 years, for example. It is ideal for protecting minor children or covering mortgage debt. It is the most affordable: serious cover can cost less than €10 a month.

• Whole life insurance: It covers your entire life with no expiry date. It costs more but guarantees that the benefit will be paid at some point. It can be useful for inheritance planning or funeral expenses.

• Disability or incapacity insurance: The most overlooked and one of the most important forms of cover. It protects you when illness or an accident means you are still alive but can no longer earn an income. It is vital for self-employed people.

• Dependency insurance: It covers costs if you need help from another person to live. It is recommended from around age 50–55 to plan for the future without depending on your children.

This is the type of insurance that causes the most confusion. A bank may require cover in order to offer a lower interest rate, but there are four facts you should know:

1. The beneficiary is the bank, not your family. The debt is cancelled, but your family receives no capital.

2. It is often 30% to 50% more expensive than buying the policy outside the bank.

3. Since 2019, compulsory insurance placed with the lending bank has not been permitted. You have the right to choose.

4. If you were charged a financed single premium—a one-off payment of thousands of euros at the beginning—you may be able to claim back the excess paid.

• PIAS (Systematic Individual Savings Plan): Suitable for retirement if you are seeking tax exemption when converting it into a lifetime annuity.

• PPA (Insured Pension Plan): The equivalent of a pension plan with guaranteed capital. It reduces your taxable base for personal income tax.

• SIALP (Long-Term Savings Insurance): Five-year flexible savings with tax-exempt returns.

• Unit-linked insurance: Insurance that invests in funds. It offers the potential for higher returns, with the investment risk taken by the customer.

• Mixed life insurance: Combines death cover and savings in one premium. It is the most expensive but also the most comprehensive option.

• Ages 25–30: approximately €35–€65 per year (€100,000 sum insured).

• Ages 31–40: approximately €55–€120 per year.

• Ages 41–50: approximately €95–€220 per year.

• Ages 51–60: approximately €180–€420 per year.

Remember that the health questionnaire is the key factor. Accurate disclosure helps prevent the insurer from refusing payment in the future.