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Living abroad without worrying about the future with international term life insurance

May 19, 2021 by Monica Garcia

Moving and living abroad is a life-changing and unforgettable experience that also contains many uncertainties that everybody needs to be prepared for. You don’t want to think of worst-case scenarios, such as accidents, critical illnesses, or even death. You might believe that will never happen to you, that you’re too young to worry about it, and it’s too early to cover that aspect of your life. However, taking out international life insurance under 30 could save you money in the future and protect your loved ones if something tragic happens. Knowing that your family will bear financial burdens when you are not around can offer peace of mind while you are living abroad!

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What is international life insurance, and why is it important? 

International life insurance policies ensure that a lump sum is paid to your family or friends (your beneficiaries) if a tragic event occurs to you while travelling or living abroad. This sum can cover your outstanding expenses like medical bills, funeral costs, mortgage payments, or general living expenses. This way, it compensates for the loss of your economic contribution.  

Taking out international life insurance is a personal decision and one that every expat should consider, especially if there are financial affairs to be taken care of. For example, if you have a family to support, assets of wealth that need protection, this insurance might be of higher importance for you than you might have thought.

There are two types of life insurance:

  • Permanent life insurance: provides coverage that lasts your entire life as long as you keep up with your insurance payments. 
  • Term life insurance policies: the one that we cover in this article. These run for a fixed period (known as “term”), and the payout only takes place if you die during the term stated in the policy. There’s no lump sum payable at the end of the policy term, meaning that if nothing tragic happens during the term, you will need to take out a new policy if you want further life insurance.

It is also possible to find other types of life insurance, like decreasing term life insurance - cheaper to purchase. Still, the payout will also decrease over the years along with your outstanding expenses -, and increasing life insurance (more expensive over time, but the sum of the payout increases too).

What does international term life insurance cover?

As mentioned, international term life insurance provides coverage for the period you decide when taking out the policy (usually from 10 to 30 years).  This kind of life insurance is quite common among young expats, as it’s specially designed only to protect your loved ones in case of premature death. 

An international life term insurance payout could help your family to cover, for example, your mortgage payments, any household bills, outstanding loans, and any extra money they would need if you were no longer around. Most insurance companies also offer you the possibility to customize your plan by including add-ons in your life term insurance, such as critical or terminal illness cover, family income benefit, to name a few.

What are the advantages?

Besides being less costly than permanent life insurances and at a fixed price, life term policies allow you to get more coverage at a younger age when the need and risk are the greatest. In other words, it perfectly fits in that period of life when you have specific needs or financial expenses that will disappear over time, like a mortgage or a car loan. Moreover, the payout will remain the same throughout the length of the term, so your beneficiaries will always know how much they would get. It is good to keep in mind that it shouldn’t be the need to pay income tax or capital gains tax on life insurance, but the payout might be subject to inheritance tax depending on the country your loved ones live in. 

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How to choose international term life insurance

Although a term life insurance is available at a lower price and easier to understand than other life insurances you can find in the market, there are some aspects to consider when choosing one as an expat: 

  • The country you are moving to: some insurance companies might refuse to cover you if you move or travel to a considered high-risk country. Most countries within the EU or EEA are considered safe, but if you move to another country outside this area, check if the authorities have issued travel warnings and if you could get extended coverage in your policy. Moreover, check if the international life insurance is portable from one country to another if you think you will move to another area in the future. 
  • The cover you need: this depends on your circumstances, and it’s a very personal choice. Some factors to consider are how much you owe if you have children, which lifestyle you want your family to have once you are gone, etc. Calculate the insured sum that you want to be covered. 
  • The coverage period: the insurance period or “term” is chosen by your criteria. Someone living abroad might benefit from a shorter period with more flexibility or might prefer a term life policy that can be convertible to permanent coverage in the future when settled down. 
  • The small print: make sure you look in detail into the limitations specified in the policy before taking it out, especially as an expat. For example, some policies might not payout if you die too soon, or the funeral costs might not include body repatriation to your home country (if desired). 
  • Life insurance through your domestic insurance: it might be the case that you are already covered, but make sure you double-check the limitations of your current policy to see if you need to change it. Most of these life insurances are also only domestic and won’t cover you if you move abroad. 
  • Single or joint life insurance: a shared life insurance policy with your partner can be a cheaper option than buying two separate policies. However, remember that the other will receive a payout if one of you passes away but will be left without cover. And if you both die in an accident, for example, your beneficiaries will receive just one payout. 

You should regularly review your life insurance to ensure it still covers all your needs, mainly if your situation changes. For example, if you buy another property or need additional coverage as your family expands.

How much does it cost? 

The amount or “premium” to pay for an international term life depends mainly on the factors previously mentioned (in general, the cover you need) and the probability that you may die in the near future. For example, the younger you are, the less likely you’re to die from a medical condition, so the cheaper your policy is expected to be. However, other aspects are considered when calculating the amount to pay:

  • Marital status
  • Hobbies containing a risk, like extreme sports
  • If you are a smoker or have previously smoked
  • Your current health 
  • Your job - some jobs carry a higher risk to suffer an accident

Remember that both the coverage (insured sum) and the premiums (cost, amount to pay) are fixed throughout the term, so the price you pay won’t increase with inflation, but neither will the payout.

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Taking out international term life insurance and Covid-19

If you have recently travelled for leisure against the governmental recommendations to a region with a heavy outbreak of Covid-19, or if you have fallen ill, applying for life insurance could take longer and ended up being more expensive for you as a young adult. Insurance companies currently ask for this information, so you will need to declare if you have travelled, fallen ill, or experienced some Covid-19 symptoms in the past.  

In general, there aren't pandemic death-related exclusions within most international life insurance policies. All this means that you will be covered if you die of Covid-19 whether you get a new policy now (staying healthy) or already covered by one.

However, keep in mind that terms and rates may change over time as life insurance companies continue adjusting to the pandemic situation.

Workwide Recruit’s selection - International term life insurance from Expatriate Group

An international term life insurance might not be at the top of your to-do list if you are moving to a new country, but it's worth taking this moment as an opportunity to consider if it's time to apply for one. Getting international term life insurance is a personal decision and should be made with careful consideration if you are going to live abroad. You might ensure that your loved ones are well protected and can take care of your financial affairs whenever and wherever anything happens to you. 

As an expat and traveller, the international term life insurance from Expatriate group might be the right choice for you. It is designed especially for people living abroad, as all their policies have worldwide protection for residents of over 170 countries, and the coverage can be up to 30 years. Once a policy has started, and as long as premiums are maintained, it does not matter if you change your country of residence, lifestyle, occupation, or travel obligations. The premium and coverage won't be affected and will remain the same during the policy term. Ideal for young expats like you and a perfect way to get affordable international life term insurance! Request a quote to know more!