by You may have purchased life insurance in your home country, but in most cases, it won’t pay out if you pass away while living abroad. That’s why you should consider international life insurance.
An international life insurance policy is a contract between you, the policyholder, and an insurance company. On your end, you pay regular premiums to the insurance company. In exchange, the insurance company pays a financial benefit to the beneficiaries you’ve selected when you pass away.
To say that life insurance is an uncomfortable topic of conversation for some people is an understatement. Nobody wants to think about death! However, knowledge is power. The more you know how life insurance works and how it can benefit your loved ones, the more comfortable you’ll feel about this serious topic.
How Life Insurance Works for International Citizens
There are two kinds of life insurance: Term Life Insurance and Permanent or Whole Life Insurance.
International Term Life Insurance
Term life insurance covers you for a fixed amount of time or a “term”, usually starting at ten years. There are a number of benefits for term insurance. You are not locked into one coverage amount for your entire life. There are often times in life when you need a large amount of insurance, like when your children are young and your mortgage is large.
Should you pass away, you’d want to have adequate coverage to support your growing family and cover all debts and costs of living. But later in life, when your house is paid off and your family is well on their way, you may need less coverage.
On the downside, once your term is over, your coverage is over too. For some people, the idea of paying a policy every month for ten years and getting nothing in return doesn’t make financial sense (though, of course, it’s a good thing as you are still alive!) Other people worry that, if their health changes, they’ll be unable to renew their policy when their term expires.
Global Whole Life Insurance
For some people, permanent or whole life insurance is a better choice. In general, the premiums are much higher. However, you aren’t limited by the term lengths. Once you’ve paid your premiums, your purchase is complete.
Most permanent life insurance policies cover you until you are well into your older years. That said, it’s important to note that some policies may include a clause where you receive fewer benefits when you’re older or that there are specific exclusions, including suicide.
Which Kind of Life Insurance is Best if You Are Living Overseas?
Statistically, most people are better off financially purchasing term insurance policies. The premiums are economical and with each term, you can adjust the amount of coverage you have according to your needs. However, permanent insurance is a better choice for people who are worried that their health may change and they would no longer be eligible for coverage at a future date.
For instance, people who have a strong family history of heart disease may fear that they will suffer the same fate and will be ineligible for coverage when they are older. Even though they may enjoy excellent health today, their peace of mind is well worth the price difference of permanent insurance.
How Are Global Life Insurance Premiums Calculated?
Regardless of the policy style you choose, your premiums will depend on how much coverage you want, your age, your health, and other factors like whether or not you’re a smoker. In general, women pay less for life insurance than men based on statistical projections of their health and lifestyle.
And while it’s always more economical to purchase insurance when you’re young, it’s a bit of a myth that policy fees skyrocket once you turn forty. For most companies, there isn’t a massive difference in policy costs between people who are 38 or 39 and those who are 40 or 41. There’s no need to panic on the eve of a big birthday!
