Expat Insurance for You & Your Family
The importance of insurance often becomes apparent when it's too late. Families can be left without financial support following the death of a loved one, and believing that this doesn't apply to you is one of the biggest causes of financial difficulties.
Insurance is extremely cost-effective and provides life-changing benefits at a low cost. The peace of mind it gives you is priceless however, so considering if you can afford not to have it is probably the most important question to ask yourself.
Medical Insurance
Levels of state health care vary worldwide and while some provide care for residents, access to quality medical assistance is not guaranteed. Without adequate state funding doctor and hospital fees can quickly spiral, more so if a condition is serious and treatment is required. In many countries, private cover can be essential as delays, low levels of care and limited resources can affect recovery.
Life Insurance
Before moving overseas, check with your current provider if your policy will remain valid. Some insurers void policies if you relocate to higher risk countries so be sure to check before leaving and update your details with them once you have arrived.
A common mistake is considering employers life insurance as a replacement for private cover. The recent pandemic has shown that changes in employment can happen quickly, and losing your job may include losing your corporate life cover and expose you and your family to unnecessary risks. Costs rise with age so buying insurance later can be expensive, but early as possible will benefit you in the long term. There are many types of life insurance available, examples for which are listed below.
Level Term Assurance (LTA)
LTA is for a contracted term and pays a cash sum to beneficiaries on death, which is vital if the deceased is the breadwinner and the family can then continue living comfortably.
The amount purchased should consider debts and future liabilities, such as mortgages and school and university fees. Once accounted for, further cover can create capital for investment purposes and income for the loved ones left behind.
Term insurance is cheaper than 'whole of life' (see below), with terms often ending when mortgages are paid, children have left home and living costs reduce along with the need for insurance.
Premiums are fixed so you know exactly what you are paying for. There is no cash value at the end of the policy and it pays out on death if within the agreed term. Inflation also affects the purchasing power of the sum assured, which should also be accounted for.
Decreasing Term Assurance
Decreasing term insurance also pays out on death within a defined term and is designed to cover liabilities that reduce as they are paid off, such as mortgages. The the cost remains fixed as the level of cover falls and again, there is no investment element or cash value at the end of the term, or guarantee that all your debts covered.
Whole of Life Cover (WOL)
Whole of life cover costs more than term assurance as pay outs are inevitable, regardless of when you die. Higher costs make it less attractive but can be useful for tax planning when used to reduce inheritance tax liabilities for loved ones.
Whole of life cover comes in many forms, so it's important to know which is right for you to avoid unwanted surprises for those it should benefit. Below are the options available.
Investment Linked WOL
Whole of life insurance can be investment linked which affects the benefits as they fluctuate with fund performance. The investment is compared against sums assured on review dates and if under-performing, benefits reduce or premiums increase, so it's possible that cover becomes insufficient or too costly to pay for.
Fixed Premium WOL
WOL insurance can be funded by one large payment or fixed premiums until, for example, you retire. Cover continues after payments cease making it useful when income reduces or ends. Other plans allow contributions until you die and is where caution is needed, as payments may become costlier the longer you live.
Critical Illness Insurance
Statistics show 50% of us will be diagnosed with a serious illness during our lifetime, highlighting the importance of critical illness insurance. If the breadwinner falls ill, can't work and income is affected the consequences can be severe. Critical illness cover can be expensive due to high probabilities of paying out, but this shows its importance.
Cover pays out on diagnosis of a qualifying condition so if you are unable to work due to illness, your household bills, rent, school fees, mortgages and groceries can still be paid, while avoiding financial stress can also have a positive impact on recovery.
Insurers provide lists of qualifying illnesses which can be confusing as not all cancers are covered. Heart attacks and strokes pay out but not conditions caused by alcohol or drug abuse. Most critical illness plans include life cover, so benefits are paid out if you die having not claimed or if your condition is diagnosed as terminal, allowing you time to get your affairs in order.
It is difficult to get insured once a serious illness or health issue has been identified, so delaying could prevent the possibility of getting covered altogether. Once done, it's there until you cease payments or pays out to beneficiaries.
Income Protection Insurance
Income protection cover replaces your salary during times of unemployment and pays an income, not a lump sum. It can also support your lifestyle in case of accidents and illnesses, until such time you return to work, reach age 65 or on death, whichever comes sooner.
Can I Get Insured?
By answering a few simple questions and without having to attend a medical, life insurance can be purchased over the phone or online in the UK. You'll be asked if you smoke or have recently, how much alcohol you drink and if you regularly take part in high-risk activities for work or pleasure.
Overseas providers usually require a medical conducted at an affiliate clinic, or a clinic of your choice with a list of the necessary required. Medicals are funded directly by the insurance company or by the customer and then reimbursed. Insurers decide if applications are accepted on standard terms and but if results show abnormalities , cover may be declined or 'rated', ie. incur higher premiums.
Multiple or High Risk Locations
Finding life insurance can be difficult for high-risk locations or unpredictable environments. This can deter seeking cover but is overcome by policies specific to riskier professions and transient workers.
Costs vary with age and health. The consequences of being unprotected can be catastrophic, yet the peace of mind it gives you is beyond compare. Insurance can be inexpensive but whatever the cost, it is effective and essential.
To learn more about which insurance cover is right for you, an expat advisor will discuss your options and ensure you and your family are covered for all eventualities.