LIFE INSURANCE FOR EXPATS

Of course no amount of money can ever replace a person. But life insurance polices can provide cash when it’s needed the most. Delivering a specified sum of money at an exact time of need. 

Life Insurance is for the living. Should anything happen to you, the life insurance you have purchased is in place to protect and provide financial relief for those who must carry on without you. 

Perhaps it is arguably even more important for expats living outside of their home country. Especially with the potnetial complications of relocation, high living costs and private medical bills. 

 Plan for the worst -Dying suddenly in an accident, by unexpected illness or even of natural causes can happen at any time.

 

Life insurance helps your loved ones pay the mortgage, bills, schooling and university costs, after you’re gone. It also provides tax-free cash to pay estate and taxes in death. Nothing can replace you in their hearts, but planning ahead with life insurance can make things easier for those you leave behind.

FREQUENTLY ASKED QUESTIONS

Do I really need life insurance?


Although life insurance is not a necessity for all, it can be essential, especially for parents of young children and those who support a spouse or a disabled adult or child. In addition to helping to support dependents, life insurance can help provide immediate cash at death. Insurance proceeds are a handy source of cash to pay the deceased's debts, such as an outstanding mortgage, funeral expenses, and income or estate taxes.




How much cover do I need?


This will vary from person to person. There are a number of things to consider:

  • How many people depend on your earning capacity?
  • What are you liabilities?
  • How long wouold it take for your dependents to become self sufficient?
  • Are your children young? Consider future costs of education
  • If you were to die what assets do you currently have that could take care of their needs?
  • Will your estate owe debts on your death?
  • If you are comfortable there are enough asetts to cover future costs and expenses, are you liable for estate taxes and if so how much?




Who will the sum assured be paid to?


You chose the benenficiaries. For example you could leave 100% of the benenfit to your spouse. Or you could leave 50% to each of your 2 children. You may wish to consider placing the funds into trust (See comments on taxes). Any additional critical illness cover will be paid directly to you.




Will there be any taxes due on a life insurance payout?


Did you know that you could avoid inheritance tax and maximise the pay-out for your loved ones by writing your life insurance in trust? When taking out life insurance, you’ll want to set it up in such a way that the beneficiaries of your policy get as much as they can when it pays out. Putting your policy into trust is a great way to do this.
One of the biggest benefits of writing your life insurance policy in trust is that you can actually sidestep paying inheritance tax (in the UK) as the value of the policy will not count towards the value of your legal estate. In the UK normally, when you die, the value of your legal estate is calculated and anything beyond the threshold of £325,000 is taxed at 40%.




What does critical illness cover include?


Critical illness insurance is a type of supplemental insurance plan. Like other supplemental plans, critical illness insurance can help fill the gaps in your health insurance coverage in the event of an unexpected medical event.If you experience a qualifying illness, critical illness insurance policies pay out lump-sum cash benefits directly to you. Qualifying events often include: • Advanced Alzheimer’s Disease • Amyotrophic Lateral Sclerosis (ALS) • Benign Brain Tumor • Cancer In Situ • Coronary Bypass • End-Stage Renal Disease (ERSD) • Heart Attack• Illness-Induced Coma • Life-Threatening Cancer • Major Organ Transplant • Stroke Because you get the benefits paid directly to you, you can use your benefit amount in whatever way you need (out-of-pocket medical costs, mortgage payments, or even transportation expenses). But don’t wait for an illness to strike before getting critical illness insurance. You cannot purchase this type of plan after an illness has been diagnosed. In order to receive the cash benefit of a policy, you must be first diagnosed after the waiting period of your policy. It is important to check exactly what is covered as it will vary depending on the insuarnce provider you use..




What is the difference between whole of life cover and term cover?


Term life insurance provides coverage for a certain time period. It’s often called “pure life insurance” because it’s designed only to protect your dependents in case you die prematurely. If you have a term policy and die within the term, your beneficiaries receive the payout. The policy has no other value. You choose the term when you buy the policy. Common terms are 10, 20 or 30 years. With most policies, the payout, called the death benefit, and the cost, or premium, stay the same throughout the term unless you chose for it to rise inline with inflation.
Whole of life provides lifelong coverage and includes an investment component known as the policy’s cash value. The cash value grows slowly, tax-deferred, meaning you won’t pay taxes on its gains while they’re accumulating. You can borrow money against the account or surrender the policy for the cash. But if you don’t repay policy loans with interest, you’ll reduce your death benefit, and if you surrender the policy, you’ll no longer have coverage.




How much does life insurance cost?


It will depend on a number of factors. It is possible to shop around and get different quotes from different insurance providers and a financial advsier can help you find the best cover for you. The cost will depend on factors such as:

  • Your age
  • Where you live
  • The sum assured and any additional critical illness cover/That is how much cover you require
  • The term of the policy
  • Any previous medical conditions
  • Whether you are a smoker
The younger you are when you take out life insurance the better. The cost of cover goes up very quickly, the older you get.




Do pre exisiting medical issues make premiums more expensive?


Typically yes. Insurance companies may exclude pre-existing conditions, increse premiums or impose a waiting period before coverage starts. Since those people are likely to cost the insurer more in claims expenses. A pre-existing condition can be something as common as high blood pressure or allergies, or as serious as cancer, type 2 diabetes, or asthma—chronic health problems that affect a large portion of the population.





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Life Insurance For Expats In Dubai And The UAE | AES International