Expat Insurance: A Comprehensive Guide to Protecting You and Your Family
When you move to a new country you may lose some of the protection benefits that you had in your previous country, your new company may not offer the same employee benefits as your previous employer, or your existing protection benefits may not cover you to the same extent.
It is critical to review your existing protection and to explore replacement options that would offer more appropriate cover. However, as an expat, what is important to consider?
There are several types of insurance. Here we look at the options.
Income protection is often regarded as the “forgotten cover,” despite the statistics showing that an individual of working age is approximately five times more likely to be off work as a result of illness or incapacity than they are to die.
Income protection insurance (IP) is a long-term policy that pays a regular weekly or monthly income when the insured becomes unable to work because of a long-term illness or incapacity.
Critical Illness Cover (CIC)
CIC pays a cash lump sum following diagnosis of one of a number of specified critical illnesses (e.g. invasive cancer, stroke, or a heart attack). The market for this type of insurance is highlighted by the fact that someone under 65 is five times more likely to suffer a critical illness than to die.
The policy may also pay out if the insured person has a particular medical treatment (e.g. aorta surgery or a heart valve replacement) or goes onto a waiting list for certain types of procedures, such as receiving an organ transplant.
Provides cover against the costs of private medical treatment.
You can claim back hospital bills from the insurance company (or companies) up to the amount of the costs that have been incurred. This type of insurance is generally considered essential for expats.
In medicine, there is a distinction between acute and chronic conditions:
- Acute conditions are characterised by their rapid onset and are usually amenable to cure. Treatment is normally of short duration and will often resolve the condition more or less fully. An example might be a hip replacement or removal of an appendix.
- Chronic conditions are long-lasting and usually incurable, and so not necessarily receptive to successful treatment. An example might be asthma, or some forms of cancer and diabetes.
Health insurance is primarily aimed at acute conditions where the speedy treatment that can be provided privately will be most effective. It is not designed for chronic conditions that are incurable (where long-term care insurance [LTCI] might be more appropriate), although the initial diagnosis of a chronic condition is usually covered.
What is Life Insurance?
Life insurance pays out either a lump sum or an income when you die. You might want it to provide your family with an income to live on or to cover a specific regular expense. Or you might want your family to receive a lump sum that they can then invest/use for income or to pay for something specific such as an outstanding mortgage or inheritance tax bill.
As with all insurance there are exclusions, so you need to read policy documents carefully. Life insurers prefer to refuse cover rather than have lots of exclusions. Providing you have been truthful on the application form, once you have cover most policies will pay out whatever the cause of death. However, there are some exceptions. For example, there is usually a qualifying period before death from suicide is covered.