Life insurance is designed to provide a safety net for your loved ones when you pass away. Anybody can purchase life insurance at any stage in their life, but it tends to be older adults who do so because of the higher risk of death above a certain age.
Although discussing life insurance and the idea of passing away isn’t very appealing, it’s necessary to protect your family in such events. It provides monetary security, so your loved ones don’t need to worry without financial aid.
If you have decided to move to another country and become an ex-pat, life insurance might be one of the many things on your mind. Whether you require life insurance as an ex-pat is more complicated question than it is if you’re staying in your home country.
In this article, we’re going to cover whether or not you need life insurance when you live abroad to become an ex-pat, with a focus on the considerations that you need to take when making this decision.
Considerations for Life Insurance as an Ex-Pat
When you move abroad to live permanently or semi-permanently for the foreseeable future, you become an expatriate (or ex-pat for short). Although living life as an ex-pat in a completely new country is a huge decision but one that millions of people make every year and don’t regret.
Becoming an ex-pat offer so many great opportunities and experiences that would never have otherwise accessed if you stayed living in your home country. However, that being said, it’s not all suns and rainbows. It also comes along with a lot of major decisions and considerations that you can’t ignore, one of which is whether or not to purchase life insurance.
So, what are the considerations that you need to take when answering, ‘Do I really need life insurance as an ex-pat?’.
Types of life insurance
There are lots of different types of life insurance. Each one has varying levels of coverage and unique benefits. If you eventually decide to purchase a life insurance policy as an ex-pat, you will need to make sure you choose the most suitable option for your and your family’s needs.
The main types of life insurance include:
- Term life insurance – provides insurance coverage for a specific period of time, such as a decade, two decades, etc.
- Whole life insurance, – offers lifelong insurance coverage and is the most ideal option for estate planning and wealth transfer when you pass away.
- Universal life insurance that comprises lifelong insurance coverage with potential investment opportunities that can maximize your finances.
Make sure you get a global life insurance policy that covers you internationally. Choosing a policy that only covers you in your current country could complicate things and cause your provider to cancel your coverage when you move abroad.
Usually, life insurance policies cover a fixed length of time, and this should be specified in your chosen policy. The level of coverage you require will depend on your current finances, mortgage, and total debts.
Your current financial situation
When considering whether or not to get life insurance, you will first need to take a close look at your finances, as your financial responsibilities are the most influential factors in this decision.
If your spouse, children, or grandchildren depend on you for financial support, life insurance could be a good choice. When you pass away, your life insurance provider will pay out a lump sum of money to your dependents, so they don’t need to struggle financially.
You should also consider your existing debts, such as a mortgage, credit card payments, or student loans. If you have significant debts that still require paying off when you pass away, these debts may be passed on to your next of kin.
Having a solid life insurance plan in place means your loved ones won’t bear the burden of your debts when you’re gone. It provides a safety net that keeps them financially stable and free of worries.
Currency and exchange rates
When you move to a foreign country, you will be subject to exchange rates. Currencies and exchange rates are constantly fluctuating and this can make it pretty tough to plan your finances as an ex-pat.
You will need to choose a life insurance policy that resides under a stable currency to ensure your family’s payout is fair and suitable for their needs. Although exchange rate fluctuations will affect your policy payout if you pass away, this impact will be reduced by choosing a stable currency.
You can chat with a representative at your chosen life insurance provider for more details if you’re unsure how currencies and exchange rates will impact your policy in the future.