Life Insurance
Life insurance can give you peace of mind, knowing that your family has the financial protection they need when you are gone. Read our guide to discover why life insurance is crucial for expats.
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Life Insurance for Expats
Life is full of surprises.
And while you can't always know what's around the corner, you can be prepared for it.
For expats, life insurance is a vital part of their wealth management strategy as it can help provide financial security for their loved ones.
This guide provides a complete breakdown of life insurance for expats. We will explore how it works, the different life insurance options and other key information you need to know before taking out a policy.
What is life insurance?
Life insurance is a contract between an individual (the policy owner) and an insurance company.
The insurer promises to pay a designated beneficiary a cash lump sum upon death in exchange for regular premium payments.
The essence of life insurance for expats is to provide financial security to their families when they are gone. This can help relieve some of the financial burden they may face.
This financial support can help cover various expenses, such as:
- Funeral costs
- Mortgage payments
- Outstanding debts
- Education expenses
- Ongoing living expenses for dependents
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How does life Insurance work?
While different types of policies and life insurance products are available, the way it works is quite simple.
It is a contract that exists between you and the life insurance provider. As long as you keep up your end of the contract and pay your premiums, the insurer will pay out a specified sum of money upon death.
The amount of coverage and premiums depend on factors such as:
- Age
- Health and medical history
- Pre-existing medical conditions
- The type of policy
Life insurance is particularly crucial for expats, as it covers various eventualities, including repatriation expenses and settling outstanding debts in a foreign country.
What is the difference between life insurance and life assurance?
Life insurance is often used interchangeably with life assurance. But while both pay a tax-free lump sum upon death, the two differ slightly.
Life assurance covers the policyholder for their entire life. This is usually called 'whole of life' cover. Meanwhile, life insurance provides cover for a certain amount of time.
This is typically known as a term life insurance policy. This is when you take out a policy that covers you for a set period of time (term), such as 25 years.
The importance of life insurance for expats
A common question is, 'Do I need life insurance while working abroad?'
Life insurance is particularly important for expats living in Asia for several reasons stemming from the unique challenges and uncertainties associated with living and working abroad.
Here's why securing life insurance is a crucial step for expatriates in this region:
- Financial security
- Debt coverage
- Education costs and living expenses
- Healthcare and repatriation costs
- Estate planning and tax benefits
- Adapting to local regulations
- Employment benefits may not suffice
- Peace of mind
The primary purpose of life insurance is to ensure that your family or dependents are financially secure in the event of your untimely death. This is especially important in Asia, where local support systems might be less accessible to expatriate families.
Expats often have financial obligations both in their home country and abroad. Life insurance can help ensure that any outstanding debts, including mortgages or personal loans, do not burden your family.
For expats with children, the cost of education can be substantial, especially if they attend international schools. Life insurance can provide the necessary funds to cover educational expenses and maintain your family's standard of living.
Healthcare costs can vary widely across Asia. In some cases, expats may prefer or need to return to their home country for medical treatment or repatriation in the event of death. Life insurance policies can cover these costs, relieving a significant financial and logistical burden on your loved ones.
Navigating estate laws and tax implications can be complex for expats, who may have assets and liabilities across multiple countries. Life insurance is an effective tool for estate planning, helping streamline asset distribution and potentially offer tax advantages.
Each Asian country has its own set of rules and regulations regarding inheritance tax liability and estate distribution. Life insurance can provide a straightforward, internationally recognised method for ensuring your assets are distributed according to your wishes.
While some expatriates might have life insurance through their employer, these policies may not fully cover their needs or be portable if they change jobs or return home. A personal life insurance policy ensures continuous coverage tailored to your situation.
Living away from your home country can bring a sense of uncertainty. A life insurance policy can provide peace of mind, knowing that you have taken steps to protect your loved ones, no matter what happens.
Types of life insurance plans for expats
The life insurance market is full of options to suit every need. But with so many to choose from, it's essential to understand the difference between them.
Below are some of the main types of cover available.
- Term life insurance
- Whole of life cover
- Variable life insurance
- Universal life insurance
A term life insurance plan provides coverage for a specified term or period. A term life policy may be an ideal choice for expats seeking coverage for a fixed duration, often tied to the length of their stay abroad.
Unlike term insurance, whole of life cover offers lifelong protection. This option may suit expats looking for a permanent insurance solution, regardless of how long they might live abroad.
Variable life insurance is a type of permanent life insurance policy. It combines death benefits with a savings account, allowing the policyholder to invest part of their premium in various accounts. This can be a good option for those who are comfortable with investing.
Universal life insurance is another permanent life insurance option. Like variable life cover, it provides a death benefit and a cash value component. However, universal life insurance products offer greater flexibility and investment options.
Life insurance for expats with Holborn Assets
Although you do not need life insurance while working abroad, it provides crucial benefits that cannot be overlooked.
Life insurance for expats offers peace of mind, knowing their loved ones have that financial safety net when they are gone. It is one of the most effective ways to prepare for what is to come.
But with so many products on the market, finding the right one for your needs can be challenging. To ensure you get the comprehensive coverage you need, speak to one of our life insurance experts.
Holborn Asia offers independent, professional advice and wealth management solutions.
We work with some of the leading international insurance companies, allowing us to offer a range of life insurance products to suit your needs.
We are part of the wider Holborn Assets Group, a leading, award-winning financial advisory company with over $2 billion in assets under management (AUM).
Book a free, no-obligation meeting today to learn how we can help you.
Frequently Asked Questions
Absolutely. Life insurance provides financial security to your loved ones, ensuring they are taken care of in your absence, making it essential for expats.
