In some countries, such as the United States, banks require title insurance to obtain a mortgage loan. While title insurance is available in Panama it has not been a requirement for mortgages since 2006. Panamanian Banks, however, do require a person to obtain both fire and life insurance policies for commercial and privates loans. This requirement serves, as a guarantee for the bank in case the person in question passes away prior to paying-off their mortgage. In such a case, the insurance company will reimburse the bank for the unpaid portion of the loan. In Panama, the property alone is not sufficient collateral for banks to issue a mortgage and thus require that all mortgage applicants have a Panamanian life insurance policy.

In accordance with article 36 of law 59, you have the option of buying your life insurance policy directly from the bank or for a private insurance broker. Most people unknowingly purchase their life insurance policies directly from the banks and subsequently, pay higher prices since banks do not base policy prices on the person’s age. When a person buy life insurance outside of a bank, he/she owns the policy which means that in the event of death, the bank would only receive the portion owned on the mortgage and the rest would go to the beneficiaries.

There are two options for life insurance in Panama: term or permanent life insurance. Term life insurance is like a picture-once taken it cannot be modified. The term and the amount will always be the same. Term life insurance is less expensive than permanent life insurance. However, permanent life insurance can indeed be modified; the beneficiaries can be change and the term or the insured amount can also be changed as many times as desired or need be. Term life insurance also generates savings, which is attractive for people that need mortgages since they can terminate their permanent life insurance policy when they pay off the mortgage and collect the savings. In many cases you can even earn money with your permanent life insurance!

For a home mortgage, the life insurance policy must be issued from a local Panamanian company, which has been approved by the Superintendencia de Seguros (The governing entity for insurance). Banks will not accept a life insurance policy that has not been issued in Panama.

With regards to the health requirement, it’s recommended to speak directly to an insurance broker to learn more about the exact health requirements. Some companies are more flexible than others when it comes to admission requirements. Also, most companies have more requirements for foreigners than they do for Panamanians because they simply have no way of verifying a person’s medical history.
Outside the bank, the premiums will vary depending on the age, the amount of life insurance covered, and whether or not the applicant is a smoker. To be considered a non-smoker you must have quit smoking cigarettes for enough time for the nicotine not to be present in your system. Also premiums are higher for the men than for women, since statistically speaking, women life longer than men. Banks require that the life insurance cover the total amount to be financed and to outlast the term of the mortgage by at least one additional year.

Exams for life insurance depend on a person’s age and the amount of insurance coverage-usually US$ 150,000 and up. The cost of medical exams in Panama is cover by the insurance company and can be done in your hotel, private resident or in the doctor’s office. Some insurance brokers may not how to conduct the medical exams outside of Panama, but this will vary. The cost of these exams will be reimbursed according to Panamanian rates.

For people who need exams for life insurance, it is recommended to drink cranberry juice for a couple of days prior to the urinalysis (this cleans your urinary track). Applicants should not exercise on the day of the exam, and women should not be on their menstrual cycle on the day of the exam, nor the days following it, since this could result in a false- positive for blood in the urine.  Fasting exams require no eating or drinking for ten to twelve hours prior to the exam; so these exams should be scheduled for the morning hours.

The application for life insurance must be completed in Spanish because it is the legal language of Panama. The owner of the policy must then sign the form. In the event that the applicant is not physically in Panama, then his/her attorney may sign for the applicant under a power of attorney.
Fire insurance does not require an original signature and must be purchased for the full value of the property. Knowledge is power, inform yourself and always work with a knowledgeable local professional.