Life Insurance in Portugal: Types, Costs and Best Options

Most foreigners first meet Portuguese life insurance at the bank, when they apply for a mortgage and discover that the loan comes with a life policy attached. But life insurance here is also used to protect a family's income, to save for retirement with tax benefits, and to cover business loans.

This guide explains the main types of life insurance in Portugal, what they cost, how the mortgage rules work and what to check before you sign.

In short:

• Term life (seguro de vida risco) pays a lump sum if you die or become permanently disabled during the policy term. It's the cheapest and most common type.
• Mortgage life insurance (seguro de vida crédito habitação) is required by banks – but you can buy it from another insurer, which often cuts the cost significantly.
• Savings policies and PPR (Planos Poupança Reforma) combine saving with tax deductions.
• A healthy 30-year-old non-smoker can usually get €100,000 of term cover for around €5–€10 a month.
• Portugal's right to be forgotten law limits how insurers can use some past serious illnesses.

Types of life insurance in Portugal

Term life insurance (seguro de vida risco)

You choose an amount (capital seguro) and a term. If you die during that term, your beneficiaries receive the capital. Most policies also cover permanent disability, defined in one of two ways – and the difference matters:

• IAD – Invalidez Absoluta e Definitiva: you are totally and permanently unable to work and need help from another person for daily activities. A strict definition.
• ITP – Invalidez Total e Permanente: you have a permanent disability above a set percentage (often 60% or 66%) as assessed by a medical board. Broader – and more expensive – cover.

Optional extras can include accidental death (double capital), critical illness, and temporary incapacity cover that pays your instalments while you can't work.

Mortgage life insurance (vida crédito habitação)

Banks in Portugal require life cover for each borrower on a mortgage. The bank is the first beneficiary: if a borrower dies or becomes disabled, the insurer pays the outstanding loan. The same banks will also ask for home insurance on the property.

Key rules:

• Free choice of insurer. The bank can't force you to buy its own policy. It must accept an equivalent policy from another authorised insurer that meets its stated minimum cover.
• Bundled discounts. Banks often lower the spread if you buy their insurance. Compare the total cost – spread plus premiums – over the life of the loan, not just the first year.
• Switching. You can change insurer during the loan. Send the bank the new policy and get its confirmation before cancelling the old one.
• Decreasing vs fixed capital. Mortgage policies usually follow the outstanding loan, so the capital falls each year. Premiums still tend to rise with age.

For couples, policies can cover each person at 100% of the loan, or split it (for example, 50/50). Covering both at 100% costs more but means the full loan is cleared if either partner dies.

Savings policies and PPR

PPR (Plano Poupança Reforma) is a retirement savings product sold as an insurance policy or an investment fund. Contributions give you an IRSPersonal income tax. Tax residents file an annual IRS return through the Portal das Finanças. deduction of 20% of the amount you invest, up to an annual limit that depends on your age (higher for younger savers). Withdrawals before retirement are possible in certain situations but can mean paying back the tax benefit.

Savings-type life policies (seguros de capitalização) are taxed favourably if you keep them for longer periods. Treat them as investment products: check fees, guarantees and risk before you buy.

How much does life insurance cost?

Premiums depend on age, health, smoking, capital, term and the type of disability cover. Indicative monthly premiums for €100,000 term cover with IAD:

Adding ITP disability cover or critical illness raises the price. These are rough ranges, not quotes – always get several proposals.

What drives the price up

• Age – the biggest factor.
• Smoking, including e-cigarettes with some insurers.
• Health history and current treatment.
• Risky jobs or hobbies – diving, motor sports, work at height.
• ITP instead of IAD, and extra cover options.

The application: health questions and medical exams

You'll fill in a health questionnaire (questionário clínico). For higher amounts or older applicants, the insurer may ask for blood tests, an ECG or a medical exam, usually at its expense.

Answer honestly and completely. If you leave out relevant information, the insurer can refuse to pay or cancel the policy.

The right to be forgotten

Since 2022, Portugal's right to be forgotten law (direito ao esquecimento) protects people who have overcome serious health conditions. In short:

• Insurers can't refuse cover or charge more based on cancer or other serious illnesses after a set period without relapse following the end of treatment – 10 years in general, and 5 years if the illness occurred before age 21. Check
• For conditions that are controlled by treatment (such as some chronic conditions), there are shorter periods.

Check the current rules with ASF or the insurer if this applies to you.

Can I keep my life insurance from home?

For personal protection, yes – a policy from your home country may still pay out if you die while living in Portugal. Check the residency clauses. State survivors' benefits are a separate matter: see social security in Portugal.

For a Portuguese mortgage, foreign policies are often difficult: banks usually want a policy from an insurer authorised in Portugal, in Portuguese, with the bank named as beneficiary. Ask the bank in writing before relying on a foreign policy.

Main life insurers in Portugal

All are authorised by ASF. This list is for orientation, not a ranking.

Independent brokers (mediadores) can compare several insurers – this is especially useful for mortgage life cover, where savings of 30–60% versus the bank's offer are common. Check that a broker is registered with ASF before using them.

How to choose: a checklist

1. How much capital? For family protection, a common rule of thumb is 5–10 years of household income plus outstanding debts.
2. What term? Until children are independent, or until the mortgage ends.
3. IAD or ITP? ITP costs more but pays in more situations.
4. Who are the beneficiaries? Name them clearly; update after marriage, divorce or births.
5. Exclusions – pre-existing conditions, suicide in the first year, risky sports.
6. Premium type – constant or age-rising (prémio natural).
7. For mortgages – does the policy meet the bank's minimum cover? Get the bank's acceptance in writing.

Making a claim

Beneficiaries contact the insurer and provide the death certificate (certidão de óbito), the medical report on the cause of death, ID documents and the policy details. For disability claims, you'll need medical reports and, often, a certificate from a medical board (atestado médico de incapacidade multiuso).

If you don't know whether someone had a life policy, ASF offers a service to help identify life insurance contracts held by a deceased person.

This guide is general information, not financial or legal advice. Policy terms vary: read the pre-contract information (informação pré-contratual) and conditions before you sign.