I’m Moving Abroad, Do I Need Life Insurance?

If you think that one person in three gets cancer and that someone in the UK is diagnosed with this disease every two minutes, it really brings home the reality of the fragility of life.  Whilst amazing advances have been made in the treatment of this disease meaning that a diagnosis is no longer a death sentence, these figures and statistics are frightening and really should make us all very aware that life is precious.

Because life is precious and because life is certainly for living and loving every minute of it, we’re all for supporting those who want to expand their physical and spiritual horizons by moving abroad and exploring the world.  However, a common question asked by expatriating individuals is ‘I’m moving abroad, do I need life insurance?’

Well, the answer to this question does not lie in your changing residency status, but in your current status and whether, in the event of your death, anyone will be left financially worse off by your loss.  Whilst this is a pretty cold way of measuring your life’s worth, it is actually critical for anyone when looking into whether they need life insurance or not.

You may assume that because you’re moving abroad you’re in some way increasing your likelihood of risk and therefore more likely to perhaps need life insurance – but unless you’re contemplating moving to a war zone in the line of your work, (and if you are, then please do look very seriously at life insurance!), your changing status from onshore individual to expatriate may have no real effect on whether you need life insurance or not.  The underlying question that will help you determine whether you need cover or not is, as mentioned, related to whether anyone will be negatively financially impacted in the event of your death.

By ‘anyone’ I mean anyone from a mortgage company to a credit card company, your spouse or your children.  If you’re moving abroad and taking on a new property, you’ve taken out a new mortgage or perhaps a loan to fund your sojourn overseas, then as an indirect result of your changing status you will have put yourself in the position that in the event of your death, the lenders in these scenarios will be left ‘worse off.’  Therefore, to cover any outstanding debts or loans that you have, you need to think about having life insurance in place to cover these amounts of money.

Decreasing term insurance might be ideal for you as the amount assured will decrease as the loan/debt is gradually paid off over time.

If you have a spouse and/or dependents it is far more important for you to seriously think about getting life cover in place…after all, how would your family cope without you on an emotional level, let alone on a financial level?  As a rough guide to the amount you need to insure your life for, many insurers say you should get cover for ten times your salary.  However, for professional expats the proposed insured sum would be very high and therefore very expensive.  Instead think about having enough in place to pay off all outstanding debts, and then insure so that you will provide your spouse and dependents with at least a basic income annually.

The duration of any policy you look into can relate to the term you have left on any outstanding loans or mortgages for example, or perhaps until your children have left school.  Have a chat with a financial adviser to find out if there are any policies that are more suitable to you and your family if you live an active and healthy life, where you will be rewarded with lower premiums perhaps.  Or find out if there is a way you can couple together all of your essential expat insurances such as health and travel cover too.  Financial advisers will know which products are better suited to you, and don’t forget, the sooner you get cover in place, the cheaper the monthly premiums will be!  The older you get, the more times you have been ill in life, the more negative lifestyle adjustments you make, (such as increasing your alcohol intake or reducing your fitness each month), the more expensive cover will be.