Hi there,

Just reading about the completion process and see that because we are taking out a mortgage we  have to take out a  life insurance policy.

Is this so and does anyone know the ins and outs of it ?

I would be grateful for some info as the books I have are a bit conflicting in their advice - to say the least !

Gilly & John

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www.duquesavillage.net     www.KeyDubai.com

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Tread carefully with Life Insurance on your Spanish mortgage. I investigated this with my own (sometime never) purchase, and found the following:

1. The market in Spain seems much less developed than in the UK.

2. Cover seems generally to be more expensive in Spain than in the UK.

3. The payout under the policy (if the worst happens), will form part of the policy holder's estate and then be subject to Spanish Inheritance tax (remember there is no exemption between husband and wife in Spain) when in the UK it may not.

We decided for all the above reasons to increase our cover in the UK rather than take out cover in Spain - however we are still waiting for our doctor to fill in a form over 3 months after he had the letter asking him to do so. Obviously the mañana culture extends beyond Spain.

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Hi guys lenders here will often insist on life cover for non resident mortgages. However we generally knock back the lenders we introduce to - one that specifically springs to mind that insists on it with direct applications and we always say ok we will take the volumes of business we do elsewhere and so they roll over and dont even try it on now. Problem a lot of the time is that because mortgages are not a regulated product here the lenders dont HAVE to tell you anything. I had a client about three years ago who turned up to complete at the Notary only to find he had to fork out over 7,000€ for a single premium life insurance policy. He didnt have the dough so could not complete - came to see us and we sorted a different product, different lender no life cover and completed about three weeks later. We have got one lender on our panel where we only place business in certain instances thus not a huge amount of influence and they will insist on the client taking life cover for a minimum amount that keeps it below requiring a medical. What Malcolm says is quite correct in that the proceeds of a life policy here also become subject to Spanish IHT - life cover here is more expensive and to add insult to injury in some cases unless you are a Spanish resident you cannot claim on the policy - look for that one in the small print at the Notary when you are trying to complete on your purchase and things are going nineteen to the dozen!

On the other side for those brave souls that are taking the plunge and coming to live here - any policy written in the UK will very likely be invalidated if you leave residency in the UK. If you are contemplating moving here the very minimum you must do is notify the provider. If you do not and a claim is made - even ten years down the line with ten years premiums - they will not pay out. You may even find they suggest terminating the cover as it will not cover you as non resident. There are a few providers that offer international policies and if you are already covered with one of them they may switch it for you to the international policy but likely at increased premium - then again if you have a policy that does not cover you as non UK resident whats the point in continuing to pay the premiums if they will not pay out on death.

Malcolm kick your GP up the arse....nicely - life companies in the UK pay GP's for medical reports - nothing against GPs before I upset Bobaol. Its not a huge amount (well it used not to be) but it is a fee for the inconvenience caused - I sympathise with all doctors and it is likely your GP is already over stretched but at the same time he/she might need a reminder to deal with it. If something were suddenly to happen for an applicant with a previous clean bill of health then it will seriously affect the insurers attitude to underwriting. Reason I say this is that it happened to a client of mine about 5 years ago - proposal in to the life company for about 9 weeks waiting for the GP report on a life and critical illness policy when the inevitable happened - guy had a car accident and loss of limb. Leave the rest to your imagination. 

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Thanks guys,lets hope we dont have to take out a life insurance policy.I just thought that it was mandatory judging by the book I am reading - hey ho I will just look for another book !!

all the best,

Gilly & John

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After reading this thread I was wondering, if you have a serious or terminal illness which you mention to the bank do they decline the mortgage because they can't sell you the life insurance or do they choose to complete on the mortgage but realise your can't get cover so don't bother with the insurance sales patter ?

Just a thought !!

       Scrufty   

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