Why Buy International Life Insurance?
Life insurance is the sort of thing everyone knows they should at some point get around to purchasing. However, when the time comes, people living outside of their home country realize it might not be as simple as just copying what your parents or friends from university have done. For them it was as simple as going with whatever insurance plans are advertised on the television or browsing the internet. Unfortunately these options are all designed for what is referred to as “the domestic insurance market”, or people living in their home countries.
Accordingly the typical professional working overseas looking to insure their family’s protection generally has the following options:
Alternative Option 1: Local insurance Plan from the Foreign Country Insurer
This certainly would appear to be the most readily available option. Watching any amount of foreign television should introduce you to a least 2 or 3 providers of insurance in your foreign resident country. There are of course a number of drawbacks most people associate with these plans. First off they might not even insure foreigners at all, or will be reluctant or unable to insure foreigners that cannot prove to be both fluent and literate in the local language (our expat friends in Asia certainly know the pains of being fluent but not yet literate in the local language). Secondly, even if you can get over that hurdle, some people rightfully feel less than confident signing a very large insurance contract whose terms and conditions are not in their mother tongue (or at least their second language). The other question that is often difficult for the insurers to answer is: what happens to the insurance policy if I leave the country? Some might provide international coverage, others will not, and some might provide coverage but it will be less than easy for your family members to make the death benefit claim. Domestic insurers are often not built to service expats.
If foreign language contracts are not an issue, and you plan to live permanently in this new country, then a local plan might be fine for you. If not, most people then start thinking of their other options.
Alternative Option 2: Buy a Plan from your Home Country
The next logical step is to make an attempt at life insurance from back home. Everyone knows a friend from school or elsewhere that is now somehow connected to the insurance industry. Failing that, a quick search for online quotes from a local company should take a grand total of 2 minutes. It does not take long however to discover that in selecting the basic options for running your quote, at some point they will ask for where you live, and your new country will not be listed as an option. It is at this point people discover that in the insurance industry your place of residence at point of policy issue (meaning at the time of starting a new insurance policy) is a huge deal. Simply put, it is extremely difficult to find a company that will set up a new policy for you while you are living overseas.
The more adventurous expat could then (sometimes on the suggestion of their insurance sales agent) consider simply putting down an old address or their parents’ address on the application form. The agent could be correct in saying that, with an old driver’s license or local bank statement to prove a connection to that address, the application could be successful and they could set up insurance. The unfortunate other half of that statement, however, is that the entire contract could be void.
Providing false information as to your country of residence will be an easy reason for the company to deny having to pay out hundreds of thousands of dollars to your beneficiaries.
An example as to why this is the case is that the company can very easily make the legal claim that they do not insure residents of that country, so the entire application would have been denied on principal. In the case of an applicant for example lying about being a smoker or non-smoker on the application, standard procedure has been to settle for a smaller death benefit payout. Here the applicant would have the strong legal claim that at this premium they would have been accepted as a smoker but just at different rates. This is not the case with an overseas applicant, and the insurance company has a perfect excuse to avoid paying out large sums of cash. In other words: don’t lie on an insurance application.
If you are going to attempt to establish insurance from your home country, be doubly certain that the insurance company confirms in writing, either in the terms and conditions, or from an employee whose title includes the word underwriter, that they issue new policies to residents of your country.
Alternative Option 3: Expat life insurance
It should come as no surprise that our conclusion that it is much easier to get life insurance designed by and for people like yourself. With an international life insurance policy you know that you can establish the plan from practically anywhere in the world (currently 207 possible countries), can maintain coverage if you move in the future, and can rest assured that you actually understand the simple terms and conditions.
With online quotes, online applications, and the potential for no-medical-exam express underwriting, it has never been easier to protect your family with low cost term insurance.