If I pay off my mortgage early, do I get part of the insurance premium back?

Yes, for mortgages signed on or after 16 June 2019. If you repay the whole loan early, the life, disability or unemployment insurance that the bank offered you with the mortgage, with the bank as beneficiary, comes to an end unless you ask the insurer to keep it in force with another beneficiary. You are entitled to have whoever collected the premium, the insurer or the bank, refund the part corresponding to the period it will no longer cover. For an earlier mortgage that you have not modified or moved to another bank, or if you took out the insurance independently, it depends on the policy. For personal loans with linked insurance the law also requires the unused premium to be refunded.

Alburquerque Abogados

José Manuel Alburquerque
Insurance law

When it applies

  • When you repay the whole mortgage early, with your own money or from the sale of the home.
  • If your mortgage predates 16 June 2019, only if you later modified it or moved it to another bank. Otherwise, it depends on the policy.
  • Only for insurance that the bank offered you to cover the risk of your being unable to pay, where the bank is the beneficiary. If you took it out independently with another insurer, it depends on your policy.
  • If you repay only part of it, it depends on what the policy says.
  • If you move the mortgage to another bank, the usual course is to keep the insurance and name the new bank as beneficiary. If you would rather cancel it and you paid a single premium, ask for the unused part, although the law is not as clear in this case.

How much you get back

  • The part of the premium for the period left uncovered.
  • If you paid a single premium covering several years when you signed, the difference can be significant. The calculation is not always a simple proportion of years, so ask for it in writing.

How to request it

Notify the insurer and the bank in writing, giving the date on which the mortgage was paid off and enclosing proof of it. If you would rather keep the insurance, for example to protect your family, say so expressly and name the new beneficiary.

This answer is provided for educational purposes and offers initial guidance on the question raised. Every matter has its own circumstances and nuances that require individual assessment. For that reason, before taking decisions with significant consequences, it is advisable to consult a professional and not to rely solely on this information. Personalised advice makes it possible to apply these explanations to the specific case and to assess the options available with greater certainty.