Five challenges that customers buying international life insurance face – and how to navigate them
Moving abroad is incredibly exciting – but the change is not devoid of a lot of ‘life’ admin. Have you considered whether your existing life insurance policy will continue to cover you once are living in a new country?
Most insurance policies – even those sold by large, international insurance companies – are only valid for the country in which they are bought. So, there is a good chance you will need to get a new policy which will continue to cover you no matter where in the world you move next.
We have identified five main challenges consumers may face when buying international life insurance, and how these challenges may be overcome:
- Establish whether your existing policy will still be valid. If not, you will need to find a reputable global company to cover you.
- Consider what each company is offering and why one company may be cheaper than another.
- Make sure you understand exactly what you are buying.
- Check whether your policy will cover your next move, and the one after that.
- Run through a final checklist before signing on the dotted line.
Establish whether your existing policy will still be valid. If not, you will need to find a reputable global company to cover you.
Before you move to a new country, it is crucial for you to inform your current insurance provider of your plans and check whether your existing policy will continue to be valid.
The 2019 Expatriate Insurance Survey, conducted by Unusual Risks (a UK independent advisory firm offering financial advice to British expatriates living abroad), concluded that only 1 in 10 UK insurance companies offer life insurance products to UK nationals living abroad. 1 A February 2021 update posted on their website noted that, due to a combination of factors stemming from COVID-19 and Brexit, this number is now zero.
UK insurers are not alone in limiting cover for people living abroad. If your current policy is not portable, you will need to investigate which global insurance providers could cover you in your new country of residence (and continue to cover you if you move again). There are only a select few companies offering truly global life insurance cover, and they may not be easy to find as they most likely would not have a local presence in every location.
Consider what each company is offering and why one company may be cheaper than another.
Once you have found which companies offer international cover, choosing which provider to go with demands some careful consideration.
The largest life insurance consumer survey, conducted each year by ReMark Group 2, noted several heartening shifts in consumer sentiment during their most recent 2020 survey. When asked what their most important consideration is when buying life insurance, fewer respondents prioritised competitive price than in 2019, while the importance of brand reputation increased by almost 50%. More consumers appear to show a renewed appreciation for the complex underwriting which informs how premiums are calculated, saying they are prepared to spend more time on the application process and obtaining medical evidence to secure a reliable insurance policy.
Aron Sharman, Managing Director of The Unisure Group’s Life Solutions, explains. “Insurers who ask difficult questions during the application process want to understand the risks before issuing a policy so they can confidently settle a claim. Companies offering policies that are very easy to buy, with short applications, are likely to do their underwriting only when they receive a claim. This approach could leave families without the cover they thought they had – when it is too late to do anything about it.”
Make sure you understand exactly what you are buying.
Some consumers have a misconception that all life insurance is equal – so it just comes down to price. This may be truer in well-regulated domestic insurance markets, but is definitely not the case with international life insurance. It’s much more important to engage an insurance adviser to help you understand what you are buying.
ReMark Group’s 2020 survey 2 reports an encouraging increase of nearly 70% in consumers choosing to research life insurance directly with insurers, with 45% fewer relying on family and friends. When purchasing a policy, nearly 60% of consumers indicated their most trusted information channels are those which include some sort of advisory service – being either tied agents, branch employees or independent insurance advisers. While around 40% of consumers do purchase insurance using search engines, directly from insurance company websites, via the phone or email, or even over social media, these are more likely to be domestic insurance rather than international insurance purchases.
International life insurance policies could include terms, conditions and, particularly, exclusions that warrant close attention. Some providers offer policies that guarantee your cover and premiums once your policy has started, while others may increase your premiums each year or in the future. Experienced insurance advisers can help you to understand these differences, which may not be immediately apparent when just comparing premiums.
As Sharman explains, “It is important that consumers take time to understand the terms of an insurance policy before they buy as not all insurance policies are equal. If there is a big price difference between two life insurance policies, there is probably a big difference in what those two policies cover – and what they don’t.”
Check whether your policy will cover your next move, and the one after that.
According to the United Nations International Migration report, the number of international migrants worldwide increased from 173 million in 2000 to 244 million in 2015; 25% of these come from high-income countries. 3
Many expatriates live in more than one or two foreign countries during their career. Some may be moved around the world by their employer, while others may look for another job internationally rather than return home when a posting comes to an end. To ensure you are covered no matter where you may move next, it is important to look for a policy that is truly portable.
Unisure’s individual life insurance policies guarantee cover for the entire policy term. This means that once your policy has started, it does not matter which changes you make to your country of residence, lifestyle, occupation, or travel obligations; cover will remain unaffected and is guaranteed for the duration of the policy term. It is still vitally important, however, to disclose everything you know on your application – especially planned future changes.
Run through a final checklist before signing on the dotted line.
- Do a needs analysis to check you’re buying the right amount of cover. You may want to use the Unisure Family Protection Calculator which can help you estimate how much insurance you need to protect your family in the event of your death.
- Ask if the premiums are guaranteed, or if they will increase in the future.
- Study the Terms and Conditions, paying particular attention to policy exclusions.
- Check what is required to make a claim and how the benefits will be paid out and make sure your dependants are aware of these processes.