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International Life Insurance for Expats
The classical case of life insurance is often called “term insurance”. If you should die during the agreed-upon insurance period, the designated beneficiary of the international life insurance plan will receive a certain sum. The money will help them to cover outstanding medical bills, repatriation of remains, funeral expenses, and similar costs.
However, most owners of a life insurance policy would like to obtain a far greater degree of protection for their loved ones. Therefore, you should carefully calculate the amount of the lump-sum payment provided by your international term insurance.
Calculate the Insured Sum
Life insurance companies sometimes quote general rules of thumb for the amount your policy should cover, e.g. five or ten times your annual gross income. Actually, it makes more sense to review exactly what your family may need. This often includes:
- further costs for settling the estate (especially inheritance taxes)
- income protection for the surviving partner
- financial reserves for your children’s education
- emergency funds to cover unexpected expenses
- savings for paying off a mortgage or debts
In the latter case, some kinds of term insurance are tailored to the specific needs of people with mortgages or large debts. The final amount – i.e. the sum needed to clear your debts – will gradually decrease as the years progress and you keep paying off what you owe. Premiums for such a plan are usually lower than for the usual kind of international life insurance.
Compare Premium Payments
How costly the premiums for your life insurance are does not only depend on the type of policy you choose. It is frequently influenced by a variety of other factors, e.g.:
- the total amount of the insurance sum
- the age of the insured
- their gender (although EU legislation now mandates unisex tariffs)
- their health (especially if they smoke)
- their occupation
- their hobbies (if these include hazardous activities, e.g. extreme sports)
- their place of residence
- the length of the life insurance term
Moreover, even with the same factors, quotes may vary from company to company. Always have several life insurance quotes and plans to compare.
Choose the Right Term
If you want to keep your life insurance, even once you give up your globe-trotting ways, the financial situation of your dependents should determine the length of the term. For instance, your plans might cover the years till your spouse reaches retirement age and is entitled to their own old-age pension. Or you want to offer your children funding until they graduate and find a job.
Check the Small Print
Everyone should read the small print before signing up for a life insurance policy. This applies doubly to expats and the topic of international life insurance. For examples, insurers may not only refuse an expat coverage or pay for their claims if they die from pre-existing medical conditions or suffer a fatal accident through gross negligence. High-risk expat destinations can be excluded as well.
However, if you intend to travel or move to such a country, it’s no good lying to the insurance company in order to get a policy regardless. In the case of your death, the provider would not have to pay under these circumstances, and your family could even get into trouble for insurance fraud. You should rather shop around for various quotes. Another company might still provide financial coverage, though for higher premiums.
Ask Expat-Relevant Questions
In addition to the potential exclusion of high-risk locations, there are further details to consider when it comes to international life insurance.
- Is the policy “portable”? Will it remain valid while an expat moves from country to country, or does the contract need adjusting for each international relocation?
- Do you need to prove some intention to return to your home country in the foreseeable future? Or is the offer truly international and will cover you even if you decide to emigrate?
- Do your survivors need to return home in order to claim the life insurance benefits? Or will they receive the money abroad?
- In which currency are the life insurance premiums and benefits paid?
Clarify Further Details
Other questions apply to every sort of life insurance, international or not:
- What happens if you want or need to cancel the policy before the insurance term runs out? Will the company buy it back? How much will it be worth?
- Can you get a cash loan on your life insurance if you ever need to obtain a credit?
- Are the premium payments tax deductible? Will the beneficiary have to pay estate tax on the lump sum? Talk to your tax consultant about these matters!
Last but not least, your family should know where you keep the life insurance contract. The contact from the insurance company should be easy to reach. A 24/7 hotline would be an ideal solution.
If you are interested in other kinds of financial protection for yourself and your expat family, there are other forms of insurance you can ask an independent broker about, for example:
- accident insurance
- critical illness cover
- income protection for chronic diseases or disabilities