Insurance - more than a matter of life and death

Sorting out life insurance is first base for most people reviewing their financial affairs with millions of policies sold around the world every year.

Although protection is a straightforward product, the discussions with financial advisors can become complicated when they start talking about add-ons and options for expats.

Some firms also try to sell life cover on far from unique selling points such as the price does not increase while the policy is in force.

Why this was advertised as a benefit is unclear as just about every life policy has a fixed premium based on the buyer’s lifestyle and medical profile on the date of application.

First financial base for expats

One point for expats to watch is that several mainstream providers, such as Aviva, Legal and General and Friends Life have pulled products recently. This has left a gap for smaller, niche providers to fill.

The temptation is for expats to rely on life cover they may already have when they move overseas, but in nearly every case, the terms of the policy only protect them if they are UK resident.

Life insurance is important, especially to expats with families or dependants who rely on their incomes.

If you are planning to become an expat, one of the first financial steps is to look at your current life policies to see if they will still offer cover once you move and that the cover is enough to provide for your loved ones.

Keeping the insurer informed

Even if a policy is portable, many insurers will decline to cover expats living in some countries.

One tip is expat life cover is often offered with renewable or reviewable pricing.

Cover is often cheaper if the person whose life is protected has a UK address and bank account.

This works if you are moving abroad on assignment for a while, but not if you are retiring or permanently shifting a home.

One add-on for expats to check out is accidental death cover.

This pays out if someone with life cover dies anywhere in the world, providing the death is not the result of ill health. Accidental death cover is not subject to medical underwriting as state of health is irrelevant to the pay-out.

Life cover tips for expats

Here are some other tips for expats with life cover:

• If you move between countries, tell the insurer to make sure the policy is still valid and no exclusions apply

• Find out how local taxes might affect a claim – the tax treatment of insurance pay outs varies between countries and the sum assured may not be enough in some places

• Don’t rely on travel insurance for life or medical cover. These are short-term fixes for tourists, not expats

If you are an expat on assignment with life cover provided by an employer, you may still need personal cover because some benefits, such as critical illness cover or income protection, may stop if you are too sick to work and have to leave the job.