Mexico: Setting Up Life Insurance

Mexico is a leading destination for expats, especially people from the United States. The country’s high affordability and ease of visiting are appealing to many. Tourists from most countries can easily stay in Mexico for six months at a time without a visa.

A lot of expats will stay for six months, leave and simple reenter the country, although you will need to obtain a residency visa at some point.

Life in Mexico is different and festive, but expats will want to take some precautions, too. Life insurance and health insurance are both smart choices. Health insurance is a necessity, and there’s a star system for rating each insurance type.

Even with the leading insurance, you may want to obtain critical illness insurance to cover your medical bills in the event of a serious medical emergency. You can avoid this form of insurance if you take out a higher plan, which has an emergency list that includes surgery, doctor fees, etc.

Concerns About Life Insurance in Mexico

Managing a life overseas is difficult for the first-time expat. When you’re in good health and young, the consequences of not having insurance are easily overlooked. As you age, insurance becomes more important.

The moment that you set down roots, have a family, get into a relationship or even if you have loved ones that you would like to leave something to, life insurance starts becoming more important.

While your loved ones may be able to avoid paying your debts, they won’t be able to avoid:

  • Grocery bills
  • Rent or mortgage
  • Education costs
  • Funeral costs

Life is expensive, and your life insurance policy can help make your loved one’s lives a little easier. The one problem with getting life insurance in Mexico is that policies are written in Spanish, and even if you have a good grasp of the language, most non-native speakers struggle with contractual words.

You need to know, with 100% certainty, what your policy’s exceptions and restrictions are.

It’s also important to consider whether you want term or whole life insurance. For most people, term is the ideal choice because it will cover them for their time in Mexico, often up to 20 years.

You may also be able to avoid having to take a medical exam if you’re still young and healthy.

Mexico’s insurers, as of October 2020, have also paid out 4.58 billion in pesos for deaths related to the corona virus. Over 21,000 policies received a payout, leading to the seventh highest payouts on record for Mexico.

A rise in payouts may mean higher costs in the near future. Typically, insurers that suffer from large payouts in a short amount of time, such as in the 2017 earthquake, will raise rates.

Expats may start paying more for their life insurance while also being unsure of the contracts that they’re entering. If you don’t speak Spanish at a near-native fluency, you should seek out expat term life insurance.

When you obtain insurance specifically underwritten for expats, you’ll be able to visit multiple countries and have a policy that covers you the entire time. A lot of life insurance claims are denied when an expat’s family files them because they’re residing outside of the country that they’re obtained in.

Expat insurance will provide peace of mind that you’ll be covered no matter how long you reside in Mexico or nearly any other country.

Why an Insurance Policy in Your Native Country Isn’t a Good Choice

A lot of expats enter Mexico each year, and while they focus on housing, work and having a good time, they assume that they’ll be covered under an insurance policy that they obtained in their home country.

Many people will seek out a policy even after living in Mexico because they still have their citizenship.

The problem is that in the terms and conditions of the policy, often buried in small writing, there are clauses that require you to reside in the target country for the majority of the year. If you’re living in Mexico for six months out of the year, the policy will often be void if you die and a claim is made.

Instead, an expat term life insurance policy will provide coverage in Mexico or most other countries that you may move to in the future.

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