Which insurance policies are mandatory in a mortgage loan?
The bank can require insurance linked to the loan. The most common is life insurance, and often home insurance. But it must accept a policy from any insurer, if the cover is equivalent. Required insurance counts in the APR and the MTIC.
In this guide
Which insurance can the bank require?
In Portugal, the bank cannot make you buy other products to grant the loan. There are two exceptions: the current account and insurance linked to the loan.
Life insurance is the one most often required. It covers the loan amount if an insured event happens, such as the death of a loan holder. The bank can require it from you and your spouse.
In our experience, banks also ask for home insurance, such as a multi-risk policy. The home is the guarantee for the loan.
Do I have to take out the insurance with the bank?
No. If the bank requires insurance, it must accept a policy from any insurer. The condition is that the cover is equivalent to the policy the bank offers.
You can also use a life policy you already have, if it meets the bank's minimum requirements.
What must the bank tell you beforehand?
If the loan depends on life insurance, the bank must say so before the contract. It must also describe the minimum cover it accepts.
It must explain that, if an insured event happens, the insured amount goes to the bank. That amount is used to repay the loan, in full or in part.
Does the life cover go down with the loan?
Yes. The insured amount must follow the amount you still owe. The bank tells the insurer how much you still owe. The insurer adjusts the premium to that amount.
How much does insurance add to the cost?
Required insurance counts in the APR and the MTIC. So always compare these two figures across banks, not only the spread.
An example. You borrow €150,000 over 30 years at 3%. Offer A has insurance at €30 a month. Offer B has €45 a month. Over 30 years, that is €10,800 against €16,200.
The difference is €5,400, from insurance alone. These are example figures, with the premium unchanged for the whole term.
What about insurance that lowers the spread?
The bank may offer a lower spread if you take its insurance. That is your choice. Ask for the simulation of your repayment with and without each product: the bank must provide it.
See the guide Am I required to keep insurance with the bank where I got the loan?
Where FINOVA helps
We compare offers with you by total cost, insurance included. If you already have a loan, see insurance optimisation. Our fee is paid by the bank.
See also What is MTIC, and why is it more important than the Spread?
Sources
- Banco de Portugal — How to enter into home loan agreements
- Banco de Portugal — Guarantees
- Banco de Portugal — Is it mandatory to have an account with the lender and take out life insurance? (in Portuguese)
- Banco de Portugal — Decree-Law No 222/2009 on life insurance linked to home loans (in Portuguese)
- Banco de Portugal — Interest rates in home loans
Sources checked on 22 September 2026.
Susana Vasconcelos
- Intermediária de crédito autorizada pelo Banco de Portugal n.º 0008496
- Mais de 10 anos na banca