Life Insurance Challenges for U.S. Expatriates

Insurance for U.S. expats can be a real pain in the neck. Your domestic U.S. life insurance provider will most likely terminate your policy the minute you move to a new country, even if it’s just for a temporary assignment. The reason? Well, expats actually have a lower life expectancy compared with those living in the States, especially if you live in a volatile country. A few insurance companies seek to eliminate this risk by cancelling expats altogether. 

Some employers understand this. Your company may cover you with some kind of coverage abroad, but many do not. However, when they do, the coverage may not be adequate.

I spoke to a young American couple not long ago and they explained that their life insurance policy was canceled because the husband’s company relocated him to Taiwan. They were not worried, however, because his job provided death-in-service benefit, which they assumed was the same thing as life insurance. Death-in-service is a common component of the expat package, but it usually only pays out three to five times your yearly salary if you die while working for that company.

There are many issues with death-in-service benefits, and even more problems with not having private life insurance abroad:

  1. Three to five times your yearly salary may not be a large enough sum for your family if you were to pass away. Living expenses, college fees, mortgages…these costs add up quickly. (For related reading, see: Is Your Employer-Provided Life Insurance Coverage Enough?)
  2. Death-in-service benefits may only cover the employee of the company and not the spouse, leaving the spouse uninsured. Furthermore, if you leave that company or get fired, your death-in-service will end, leaving you completely uninsured.
  3. If you live abroad and your private insurer never finds out (i.e. cancels your policy) and you pass away, the insurance company may not pay out the sum assured since you lived abroad at the time of death.
  4. If you start your own business, work as a freelancer, or work for a company that does not provide these insurance benefits, you’ll be living uninsured. Private insurance is the only way to go. (For related reading, see: What to Expect When Applying for Life Insurance.)
  5. If your insurance company drops you after moving overseas, when you return to the U.S. you’re going to have to buy a whole new insurance policy. Life insurance is age-sensitive. The younger you are when you purchase an insurance policy, the cheaper the policy will be for the rest of your life or term. It’s best not to wait a few years to get insured after your assignment abroad; purchase it while you’re still young.

If you’re an American living overseas with an existing life insurance policy, it’s best to ask your provider if it covers you outside of the States. Likewise, if your company says they will provide a new policy for you while working in another country, get the complete details to see if it’s adequate for you and your family.

If it isn’t, there are insurance providers out there that will take on American expats. These policies will not only sufficiently cover you while you’re abroad, but also continue protecting you and your family after you return to the U.S. They are true international policies for the global family, specifically made so you don’t have to be uninsured no matter where you call home.

(For more from this author, see: Why Are So Many Renouncing U.S. Citizenship?)