Life Insurance: Some Options for Expatriates
In general, if you are an expatriate seeking life insurance whilst overseas, you have three options:
1. Australian Life Insurance
Obtaining life insurance cover for Australian expatriates from Australian insurers is usually possible except in situations where the country of residence is considered unduly "risky" - with insurers often relying on the country travel warnings issued by the Australian government to make this judgement. However, we have noticed over the years a growing preparedness by some Australian insurers to extend expatriate coverage on very reasonable terms. We certainly believe that coverage by Australian insurers is usually the most appropriate and cost effective course for Australian expats and should be the first option pursued.
2. "Host" Country Life Insurance
You can seek life insurance cover in your host country from a reputable firm. This may be the preferred solution if you are likely to remain in the host country for a very long period of time, even perhaps permanently, and your future costs are likely to be in the local currency. If, however, on any premature death the family’s long term costs are likely to be more Australian dollar related (for education, housing, support) then you are taking a potential risk regarding exchanges rates and, in some situations, your family’s ability to transfer any payment out of the country. Additionally, in developing countries, the local premium rates are likely to reflect lower life expectancies and higher country risk.
3. International Life Insurance
There are circumstances where it may be appropriate to consider international or offshore life policies. These are policies issued outside of national jurisdictions and are available in a range of major currencies. If you intend being overseas for a number of years these may be a good fit, but it should be the subject of discussion with a professional adviser to ensure that they meet your personal circumstances and that there are no untoward tax or other consequences. Also carefully review the premium rates against alternatives (they can sometimes be high) and consider the possible impact of any currency movements on both premium payments and final payouts. Policies of this nature are often sold as "pseudo" investments offshore and care is recommended.
Exfin provides access to advisers who can provide specific advice in relation to whether coverage is available through an Australian or International insurer and the premium rates that would apply.