Life Insurance for Expats
Last updated: 16 October 2014
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"Insurance companies in the UK may be in a position to provide you with safeguards that aren't necessarily in place in other countries"
In many cases, if you already have life insurance through a major provider, you may find you don’t have to change a thing except provide the company with an address change - and arrange payments from your existing bank account.
You could already be covered no matter where you live – again, check with your current provider and see what the limitations of your policy happen to be.
Ensure you're covered by your current life insurance policy
It might sound silly, but it is vital to ensure that your life insurance policy covers you in your new location. If you are unsure, you should speak to your provider immediately to establish the facts.
It has been known for expats to not check this and when they passed away, their insurance company refused to pay out because of the country they were living in at the time.
Term insurance is a type of life insurance policy that provides coverage for a certain period of time, or a specified "term" of years. If the insured dies during the time period specified in the policy and the policy is active - or in force - then a death benefit will be paid.
Term insurance is initially much less expensive when compared to permanent life insurance. Unlike most types of permanent insurance, term insurance has no cash value.
There are many different types of term insurance policies available. Many policies offer level premiums for the duration of the policy, such as 10, 20, or 30 years. These are often referred to as "level term" policies.
While premiums for these level term policies remain level for a set number of years, after this time period the premium level can increase, so policy cost should always be considered.
Most term policies can have a built-in privilege to convert to a permanent policy regardless of any changes in the insured's health condition.
Advantages of term insurance
- Initial premiums are lower than those of permanent insurance, allowing you to buy more coverage at a younger age, when the need is the greatest.
- Good for a specific need that disappears over time, such as a mortgage, children's education costs, or an automobile loan.
- Policy proceeds pass to the beneficiary tax-free.
Disadvantages of term insurance
- There is no build-up of cash value.
- Has a finite term that the policy is in-force.
- Premiums rise as you grow older.
- Coverage may terminate at the end of the term period or may become too expensive to continue coverage.
Choosing the right life insurance policy
If you don’t currently have a life insurance policy but expect to buy one in the near future, you may wish to consider purchasing a policy from a UK company before you relocate (making sure, of course, that the policy does cover you wherever in the world you live). The reason why this is advisable is due to the fact that insurance companies in the UK may be in a position to provide you with safeguards that aren't necessarily in place in other countries.
This is not to say that there are not perfectly suitable, trustworthy, reputable firms worldwide. If you do decide to buy international life insurance further down the line after you’ve relocated, just make sure you deal with a firm with a good financial standing and sound ownership. An experienced adviser in this field can help you make the right decision.
For more advice and information on obtaining life insurance while living overseas please request a call back from our expat insurance experts at Clements Worldwide.