getting life insurance right for expats!
introduction
So there’s a big chance (over 80%), if you’re an expat
That you’re paying premiums into a life insurance policy
That’s not going to pay out if you needed it
And this is totally unnecessary
You can have cover that will always work for your family!
And ensures that you’ve always got cover
Even if you’re getting regularly reposted to new locations
Your life insurance is completely portable…
Want to know how then keep reading
How you can have life cover that works even when you move
So where where we?
In our last post we looked at…
How, as an expat we can get life insurance that’s portable
We went over some of the main obstacles
That prevent us from getting our life cover sorted out!
it comes down to choosing the right policy
To have life cover that remains constant
Even after you’ve moved to another country
Having peace of mind because you know!
Your family will have financial resources if they lost you
And knowing this for sure is a big deal
Not only this they’ll get quick access to them
Without getting stuck in probate or getting clobbered with taxes!
You might not like to think about death
SO DON’T!!!
INSTEAD, think about how you’re taking care of the people who are most precious to you
You may think that you’ve got plenty of time
To get your cover sorted out, your fit and healthy
What happens if you have an accident…
Or receive a diagnosis for a serious health issue?
At best you’ll be paying a lot more for your cover
At worst you won’t be able to get cover…
Leaving you family exposed to financial uncertainty
REMEMBER, A stitch in time saves NINE!
You may think that getting cover could be expensive
Though research shows we overestimate
The cost of life insurance by at least 300%
If your family lost your income how long
Could they keep going financially?
Getting life cover makes a big difference to the people you love
You don’t want to be thought of as CHEAP
You might get cover through your company
So you don’t need any more, Right?
For starters is it going to be enough?
You probably don’t know
And in most cases it isn’t,
Your family will have to survive on a fraction of what your making right now
And when you move companies what then?
If you’ve had health issues you might not get cover
Get your own policy and it won’t be an issue
Or it could be you don’t trust insurance companies
So many of us don’t
If that’s you then what’s your Plan B?
How are you going to make sure your family are financially secure?
In most cases the chances are life insurance is still a better option
And guess what…
Life insurance companies aren’t as bad as you think
In most cases they pay over 98% of all claims
That’s pretty reliable!
It might all be just too complicated
With a bit of help it doesn’t have to be
You can find the right life policy for your situation
And once you have it you’ll know your family are secure
“I’ll get a policy where I’m living right now“
What currency are your expenses and liabilities?
Where would your family go if they didn’t have you?
If the local currency falls dramatically
It’s going to mean your family have a lot less money to live on
And remember if you move your cover is going to end
What if you can’t get cover?
What you need to do to get your life insurance right
So lets start off with the basic fundamentals
What type of policy is best for an expat?
An expat should have an international life insurance policy
So what is an international life insurance policy
Well it’s a policy that keeps providing cover
Even if you move to another country…
No time limits or conditions attached
It’s important because you want, NO YOU NEED
Continuity in your personal protection
Whatever happens you know that your policy
Will pay when you need it to!
what's the difference between policies?
We’re going to get a bit technical now
So please forgive us
We’ll keep it as simple as possible, Promise
Term, Whole of Life & Return of Premium
What’s the difference an what should you choose
Let’s start with the difference
term life insurance
This type of life insurance provides cover for a set time period
You pay your premium you get cover
At the end of the term cover ends AND THAT’S THAT!
If anything happens between the start and the end of the policy
The policy pays the selected benefit amount
There’s no investment, no cash value at the end though it’s the cheapest type of cover and it works!
whole of life
Well it does exactly what it says
That is it provides permanent life cover for as long as you need it
There are a couple ways of doing this
Non-profit whole of life policies are like term policies in that there is no investment
Policyholders receive a cash lump-sum on death
Though it’s more expensive that a term policy
Investment linked whole of life policies have two parts
Part of the premium goes towards life cover
And part goes into investments
As time goes on the investment part grows
And in the meantime if anything happens
The policy pays a guaranteed cash amount
If you surrender the policy there could be a cash value
There not the most transparent policy
And there usually pretty expensive
return of premium
These policies have a lot in common with term insurance
You select how much cover you need
And for how long you’re going to need it for
You pay your premiums
And if there’s a claim before the end of the term
The policy pays the selected benefit amount
If there’s no claim and the policy ends
Then you’ll get back what you’ve paid in!
Sounds great, Right!
Well there quite a bit more expensive than a term policy
If you stop the policy before the end of the term
Then you get NOTHING!
how is this going to help you?
As far as we’re concerned…
NINE TIMES OUT OF TEN, there’s one choice
And that is term life cover
You want to know why, Right?
Whole of life and Return of premium policies
Give you money back
Term cover is much cheaper
Invest the difference and you’ll get a better return
From a term policy and investment
Than you would from the other two!
there are some exceptions to the rule
If you have someone who’s always going to be dependent on you
For example a child or sibling with special needs
A whole of life policy is the perfect solution
Whether it’s a non profit or investment linked policy
Doesn’t really matter, use what you prefer
Whole of life is going to provide financial resources
To take care of them whenever it’s needed
Another time whole of life is the best option
If you’re looking to provide for tax liability
On your estate…
Life insurance is currently one of the very best options
And whole of life works the best because…
It’s always there and it’s going to pay
Other than that term life insurance is the best option
why are we so sure?
When I moved to Malaysia
I had a mortgage and people depending on me
I had a life insurance policy
I sent them a change of address notification
And I carried on paying premiums
Even though I was a financial professional
I wasn’t aware that I had an issue
Only when I was doing research I found out that I did
I found that my existing policy no longer covered me
And I was still paying premiums
I discovered that most life companies aren’t set up to tell us this
So, I had to make changes!
I looked around and set up an international term life policy
Replacing the one that I’d set up back home that was now void
From then on expat insurance became a major part of my business
And for some of our clients it became the most important thing
That we ever did for them and there families
Whether they’d lost a loved one who was their primary provider
What we did provided them with time to breath and to grieve
Or when a primary provider found out they had cancer or MS
What we did allowed them to take time to get better
Without the worry of how they were going to provide for their family
If you have to claim on your life insurance it will be some of the best money you ever spent
If you don’t you might see it as a waste of money
The thing is we never know if or when we’re going to need it
And if we don’t ever need to claim be grateful that we didn’t!
life insurance that works for any expat: The 5 steps you need to follow!
- Decide what benefits you need
- Decide on what type of policy you need
- Find policies that give international coverage
- Get quotes and figure out what it’s going to cost
- Set up the policy in the right way
It’s a simple process and it helps you get your protection benefits right
It works because you’ve taken control of an important part of your life
It also works because you’ve set your policy up in the right way so it pays benefits fast
Without getting stuck in probate and getting hit by taxes
Lets look how we can do this
how to decide what benefits you need
So what are the factors do we need to consider?
So if you have debt and dependents
Your going to need life insurance at the absolute least
If you received a diagnosis for a serious illness
That affected your ability to work how would this effect you?
How long could you expect your company to keep paying you?
Would you have the financial resources to keep supporting your family?
Would you have the resources to keep meeting your liabilities?
If the support that you’d get from your company is very limited 3-6 months income for example
And your answering “No” to the other questions
Then you should be thinking about including Critical Illness & Disability cover as well!
If you’re looking to provide the resources to pay an estate/inheritance tax liability
Or you just have debts that you want to provide for
Then life insurance would be enough
Easy right?
which policy type is right for you?
We’ve already mentioned that in our opinion
Term life cover is the very best option
And whilst you only get something back if you make a claim
The extra cost of other types of policies outweighs the return you get back
Taking a level term life insurance policy
And then putting the extra cost of a whole of life or a return of premium policy
Into a low cost investment would give you more back!
So if you have a time limit on the debt your repaying
Or the dependents that you need to support
Then a term policy is your best option!
If it’s just a debt that you need to cover then reducing term is a good option
Every year the benefit amount reduces inline with the amount
That you’ve repaid on the debt
The premium will be lower and you don’t end up paying
For benefits that you don’t actually need
If you’re providing cover for an estate or inheritance tax liability
On your life or even on someone else’s (yes you can insure someone else’s life)
Then there’s no way of knowing when the claims going to happen
In this case a whole of life policy would be your best option
Whether you choose a investment linked or non profit whole of life
Depends on your own situation
Look at both options and see which is the best for you
If you have someone who’s always going to be dependent on you
For example because of severe disability
Then term cover won’t work
Once again whole of life will be the best solution
Whether it’s a policy that has investment or not
That is best depends very much on your situation
So look at both options and see which is best for you
Again that’s easy right?
So lets move on
Find Policies That Are International
what's an international life insurance policy?
This may seem like an obvious question
Though it’s surprising what some people think
Qualifies as an international life insurance policy
What can be confusing are global insurance companies
Who have offices and operations around the world
Expats see these companies in the country where they’re now living
And they think that they’ve found an ideal solution
A policy from one of the world’s largest insurance companies
Though what they’re getting
Is a local policy, domestic life insurance
It’s in local currency and it’s put together for that market
If and when you move you’re going to run into the same situation
All over again!
Cover will end and you’ll have to set up a new policy AGAIN
Presuming that you can
And if you can’t you’ll find yourself without cover
So an international life insurance policy
Is one that keeps providing the benefit for you
Even if you move to another country
It gives you consistent coverage
Portability in your financial plan that you can rely on!
You need to make sure that any policy you’re looking at
Gives you this kind of coverage
Ask the question of the provider or check terms and conditions
To see if there are any policy restrictions linked to location
That’s pretty straight forward right?
OK so lets keep things moving and head onto the next step
how to figure out what you can afford
So by now you should know the benefits you want to include
The type of policy that’s going to work best for you
And you should also have identified an international policy provider
If you took us up on our offer in Part 2, then you’ll know how to calculate how much cover you need
So the next step is to get quotes
Why do you want to get quotes?
Well first of all you want to see how much your ideal scenario is going to cost
Is it all affordable for you?
If it is then which policy will give you the best value
Cheapest isn’t always the best
Look at what a provider charges and also ask about claims payout rates
What’s their overall rate?
Do you want additional benefits (i.e. riders) on your policy
Such as disability and critical illness cover
How do these riders work?
Riders generally come as an accelerated benefit
Which means the total amount of life cover will reduce
By the amount paid out for the critical illness or disability claim
Once you know what it’s going to cost
You can make the decision of what to include
Based on your budget
How to set up a policy RIGHT!
Everyone wants their life insurance to pay out fast
You want the money to get to your loved ones as soon as possible
You also want the full benefit amount to reach the intended recipients
So it’s available to the people it’s intended for
Not held up or reduced by taxes
So how do you make sure that this happens?
Well for starters if the policy is on your life
Which means that if you die it’s going to pay out
Then you shouldn’t also be the policy owner
If you are then it’s going to cause problems for you
Why’s that, you’re thinking?
Well if you own the policy and the life insured
Then the benefit pay out will be part of your estate
That means it will have to go through probate
Which could take years to finalise
Depending on where your estate is processed
It will also add to the value of your estate
Which could mean that it’s subject to inheritance/estate tax
Then the amount due on your estate could increase
Meaning that not only is it delayed
There would also be less money available than you intended
So how do you avoid this?
You’ve got a couple of options depending on the benefits included
First option is to have someone else own the policy
It could be your spouse on their own
Or it could be all the intended beneficiaries as joint owners
This is perfectly fine for life insurance only
Another option is to write your policy into trust
This will allow you to maintain a degree of control over the benefits
This might be important for you if you’ve added
Critical illness and disability benefits to your policy
Putting a policy into trust would mean that you don’t own the policy
Yet still have access to the benefits if you make a claim
It also means that the policy won’t go through probate
And it won’t be subject to inheritance taxes
Though it’s a bit more complicated than someone else owning the policy
This is because you need to set it up properly which involves some extra paperwork
Though it doesn’t cost any extra to do this with a life policy
If you’re looking to provide resources for a dependent who’s disabled
Then your policy should definitely be written into trust
This allows you to make sure that the resource provide for the person who needs them
And it helps to protect them from possible exploitation
so now it's over to you!
So we’ve come a long way, right?
Our goal has been to get you to a point where you have protection benefits that work for your expat life
If you’ve been with us from the start of the series
You’ll know portability of financial assets is important for expats
The only way you’re going to achieve that with your life insurance is an international policy
More than that!
If you set it up RIGHT then if needed it will pay benefits quick and without taxes
So when are you going to do it?
Are you going to take the time to get your families protection right?
We know how to make this easy for you
We can guide you through the process and make sure that you’ve got what you need
Click below and find out how to get your quote for international life cover
International Life, Disability & Critical Illness Insurance
Flexible protection designed for expats!
