The Supreme Court sets limits on single-premium life insurance linked to mortgage loans.

La STS 913/2026, of 11 June, represents significant support for consumers who took out mortgage loans with single-premium life insurance policies imposed by the lending bank.

The case reviewed by the Supreme Court contained several particularly relevant elements:

• A single premium of €24,467.62.
• An insurance policy taken out with an insurer belonging to the same corporate group as the bank.
• The premium financed within the mortgage loan itself.
• A mortgage with a term of 40 years.
• The insurance arrangement being practically “hidden” within a transfer order.
• And, in particular, a cost structure that prevented the consumer from clearly understanding the true cost of the financing and that was not adequately reflected in the APR.

What does the Supreme Court consider unfair?
 

The ruling does not state that every life insurance policy linked to a mortgage is unfair.

What it considers unfair is the combination of several circumstances:

• The imposition of an insurer belonging to the bank’s own group, without any real alternatives.
• A high single premium instead of periodic premium payments.
• The financing of that premium through the mortgage loan itself, resulting in the consumer paying interest on the insurance cost as well.
• A lack of transparency regarding the actual economic impact of the arrangement.
• The absence of any financial benefit for the consumer that would justify such bundling.

The Supreme Court further rejects the argument that a clause can escape unfairness review simply because it is formally presented as a “transfer order”. What matters is what is actually being imposed on the consumer, not the name or location of the provision within the mortgage deed.

Can the money be recovered?

Yes, but not necessarily the full amount of the premium. Any restitution must take into account the portion of the insurance coverage that has already been consumed, meaning that each case must be assessed individually and the corresponding settlement calculated.

Generally speaking, the more recent the mortgage and the less time that has elapsed under the insurance coverage, the greater the amount that may potentially be recovered.

What about mortgages entered into after 2019?

The situation is even clearer for loans governed by Law 5/2019 on real estate credit agreements. Banks may require certain insurance policies, but they must allow consumers to provide an alternative policy from another provider where it offers equivalent terms and coverage.

In addition:

• Banks may not charge a fee for reviewing the alternative policy.
• Banks may not worsen the loan conditions because the consumer chooses a different insurer.
• This right must be respected both at the initial contracting stage and upon renewal.

This STS 913/2026 does not mean that all such insurance policies are automatically void. However, it does establish highly relevant criteria for determining whether there was an unfair imposition and a lack of transparency.