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Is it compulsory to buy insurance from a financial institution when signing up for a mortgage?

Not in general. There is no regulation that forces you to enter into any insurance contract when taking out a mortgage or subrogating a previously existing one.

However, it is common practice for an institution, before granting a loan, to require the borrower to fulfil one or several additional requirements (such as having their salary paid into the account, buying a pension plan, taking out one of several specific kinds of insurance policy, etc.).

It is therefore important to check whether or not the obligation to take out any such insurance is contained in the contractual conditions, and if this is the case, the exact terms governing it.

Likewise, it is important to check whether it is compulsory to maintain the insurance for the life of the loan with the same insurance company, and if there are any restrictions on changing insurance company.

In all cases, once the operation has been formalised, the obligations of the parties shall be governed by the clauses and conditions signed in the corresponding contractual documents.

You can find out about el criterio del Servicio de Reclamaciones de la Dirección General de Seguros y Fondos de Pensiones concerning insurance products linked to mortgage loans.