What happens to clients' UK-based life insurance if they move abroad? Expatriate Healthcare's Lee Gerry outlines some of the potential issues that advisers and customers should bear in mind
In the 21st century, many more people lead far more transient lives than in previous generations, which means that consumers should, ideally try to think ahead about major changes that may take place in their lives before they buy a life insurance policy.
And if they do decide to move abroad, they need to examine carefully their existing life insurance policy to see if the coverage is still valid. Therefore, the objective is to future-proof their life insurance policy as much as possible so that unknown events in a person’s life don’t affect the protection that they afforded.
This is especially important if one of the events affects the customer’s ability to obtain any cover whatsoever: for example, a medical condition that would preclude them from obtaining a new policy or a move to a country where term life either isn’t available, or where underwriters consider the country of residence such a high risk that they won’t offer cover.
That doesn’t mean just looking at high-risk countries such as Afghanistan or parts of Africa. Spain is a country where underwriters are reluctant to offer cover because of the complicated inheritance tax (IHT) rules, and the way in which policies have to be administered.
While a ruling by European Union simplified the IHT rules (previously they were different, whether you we a resident or a non-resident, but the EU ruled this discriminatory) the changes aren’t expected to take effect until January 2016.
Domestic underwriters, not unreasonably, are wary of how international rules and licensure can impact on the ability to undertake risk and the administration of a policy.
Brokers have a key role to play here because for long term policies a longer term view may needed to be taken of a customer’s circumstances. It is important, therefore, that brokers really probe their clients about their future work and retirement intentions to ensure that any policy they do recommend is adaptable and is truly fit for purpose.
Portable policies
As a result of this trend towards a more transient lifestyle, Expatriate Healthcare has identified a growing demand for life insurance policies that are truly portable and follow the international traveller wherever they go: whether as a standalone product, or to complement an existing arrangement.
For this reason, we have developed an international term life insurance product that is specifically aimed at expats. The policy remains in force if the policyholder moves from country to country, and it can be quoted and applied for online, with premiums accepted in three currencies: sterling, euros and US dollars. Currently the policy is available to persons resident in 88 different countries and 56 different nationalities (subject to licensing). Capacity for the product is provided by ANV’s Lloyd’s of London Syndicate 779.
A UN report in 2013 showed that a record 232 million people – 3.2% of the world’s total population – live in a different country to the one in which they were born.
The trend towards a much more international lifestyle is clear. In 1990 the number of people who had moved to a different country was just 154 million, rising to 175 million in 2000.
It is up to the insurance industry to adapt to this changing reality and supply the life insurance and other financial services products that the global citizens of today require.
