If you took out a mortgage in Spain some years ago, it is possible that the bank required you, almost as a side note at the signing, to take out a life insurance policy paid in a single premium that was added to the amount you borrowed. If this is your situation, you have likely been paying interest for years on a product you neither chose freely nor fully understood at the time.
This is not an isolated case. The practice was common across a large part of the Spanish banking sector during the years of greatest mortgage expansion, and Spain’s Supreme Court has just confirmed, in a ruling issued in June 2026, that this single-premium life insurance can be declared null as an unfair contract term when it is imposed on the borrower without any real alternative.
In this article we explain what the Supreme Court has decided, why this clause may also be void in your own mortgage, and what steps are worth taking if you wish to claim back what you paid.
1. WHAT THE SUPREME COURT HAS DECIDED
The relevant ruling is Supreme Court Judgment (STS) 2627/2026, of 11 June 2026 (ECLI:ES:TS:2026:2627), issued by the Civil Chamber of the Spanish Supreme Court, with Justice Pedro José Vela Torres as rapporteur.
The case is representative of thousands of mortgages signed in Spain: the lending bank required the borrower to take out a loan-amortisation life insurance policy (covering death and permanent total disability) with an insurer belonging to its own corporate group, through a single premium of 24,531.71 euros, representing more than 16% of the loan capital, which was financed within the mortgage loan itself.
The Supreme Court confirms that this clause is void as an unfair contract term and, in addition, sets out the criteria for calculating how much the bank must refund to the consumer, a point that had until now produced diverging rulings between lower courts.
2. WHAT EXACTLY IS A SINGLE-PREMIUM LIFE INSURANCE POLICY LINKED TO A MORTGAGE
It is worth distinguishing this product from an ordinary life insurance policy, which is paid through periodic premiums (annual or monthly) and which the client may freely arrange with any insurer of their choosing.
A single-premium policy, by contrast, is paid in full at the time the mortgage is signed, with the amount added to the loan capital, so that the borrower pays interest on it for the entire life of the loan, exactly as if it were part of the money used to purchase the property. In practice, the bank often presents this in the deed as a simple “transfer order”, without clearly explaining that it constitutes an additional financial cost of considerable economic significance.
3. WHY THE SUPREME COURT CONSIDERS THIS CLAUSE UNFAIR
The ruling identifies several factors which, taken together, lead to the clause being declared void under Article 82.1 of the Spanish Consumer Protection Act (TRLGDCU), which transposes the EU Unfair Contract Terms Directive (93/13/EEC):
- Imposition without a genuine alternative: the client was not offered the possibility of taking out the insurance with a different insurer, nor of choosing a periodic premium instead of the single premium.
- Lack of transparency: the cost of the insurance was not clearly reflected in the loan deed, nor was it included in the Annual Percentage Rate of Charge (APRC), in breach of Order EHA/2899/2011 on transparency and protection of banking customers and Bank of Spain Circular 5/2012.
- Corporate linkage: the insurer belonged to the same group as the bank, which was also named as both policyholder and beneficiary of the policy.
- Clear economic imbalance: the premium represented more than 16% of the loan capital, was financed over the long term, generating additional interest throughout the life of the mortgage, and the client received no interest-rate reduction or equivalent financial benefit in return.
- Breach of EU legislation: the clause infringes Article 12.4 of Directive 2014/17/EU, which requires the lender to allow the consumer to take out an equivalent insurance policy from a different provider at no additional cost.
An important point: it is not necessary to prove bad faith on the part of the bank for the clause to be declared void. It is sufficient that the client was not offered any genuine alternative, nor given the information required under the transparency rules in force at the time of signing.
4. WHAT HAPPENS ONCE THE CLAUSE IS DECLARED VOID
When a court declares this clause void, the bank must refund to the consumer the amount of the single premium paid, together with the agreed interest.
The Supreme Court refines this effect: the amount to be refunded is reduced by the proportional part of the premium corresponding to the period during which the insurance did provide cover, calculated up to the date the judgment becomes final. In other words, the refund is not one hundred per cent of the amount paid, but the portion corresponding to the cover that no longer makes sense to maintain once nullity has been declared.
Important: the exact amount recoverable depends on the date of the mortgage, the amount of the premium, the term of the loan and the time elapsed, so it is always advisable to request a case-specific calculation before making a claim.
5. CAN YOU CLAIM EVEN IF YOUR MORTGAGE IS OLD OR ALREADY PAID OFF
This is, by far, the question we are asked most often. The answer requires distinguishing between two separate legal actions:
- The action to have the clause declared void as unfair is an action for absolute nullity and, under settled Spanish Supreme Court doctrine, does not become time-barred with the mere passage of time. This means that, in principle, it makes no difference whether the mortgage was signed in 2005, 2012 or 2018.
- The action to claim back the money (restitution action) is subject to a limitation period, but recent case law on unfair mortgage clauses applies consumer-friendly criteria as to when that period begins to run, in many cases linking it to the date the court ruling declaring nullity becomes final, rather than to the date the premium was paid.
A relevant point: the fact that your mortgage has already been paid off, or that many years have passed since signing, does not automatically mean your claim is time-barred. This is an assessment that must be made on a case-by-case basis, looking at the specific dates involved, before ruling out a claim.
6. HOW TO CHECK WHETHER YOUR MORTGAGE INCLUDES THIS INSURANCE AND HOW TO CLAIM
- Review your mortgage deed and look for references to a life insurance policy, a loan-amortisation insurance, or a transfer order for payment of an insurance premium at the time of signing.
- Gather the relevant documentation: the public deed, the binding offer, the pre-contractual information sheet, the insurance policy and proof of payment.
- Submit a prior claim to the bank, usually through a formal notice (burofax) or the bank’s customer service department, keeping a written record of the request.
- If the bank does not respond within the deadline or rejects the claim, it is possible to bring court proceedings to seek a declaration that the clause is void and to obtain restitution of the corresponding amounts.
7. COMMON MISTAKES TO AVOID
- Assuming that, because the mortgage has already been repaid, a claim is no longer possible.
- Confusing this loan-linked life insurance with home or contents insurance, which follows a different legal logic and regulatory regime.
- Accepting the bank’s first negative response without a prior legal assessment of the case.
- Starting a claim without first reviewing all of the available contractual documentation.
HOW CAN CPG ABOGADOS HELP YOU
At CPG Abogados we review your mortgage deed and insurance documentation to determine whether your case fits within the doctrine set out by the Supreme Court, calculate the amount you may be entitled to recover, and handle the entire claim on your behalf, both out of court and, if necessary, before the Spanish courts.
If you believe your mortgage included a single-premium life insurance policy imposed by the bank, please contact us and we will assess your case individually.
