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Why Life Insurance and Income Protection Should Be Top Priorities for Expats
When it comes to financial planning, many people follow a traditional sequence of priorities: first, clear debt; second, maintain adequate cash reserves; and then, focus on long-term savings and investments. However, if you’re living and working abroad as an expat, your financial planning needs a slightly different approach. Before diving into savings and investments, it’s crucial to prioritize life insurance and income protection.
The Importance of Life Insurance for Expats
If you view your wealth as a means to protect yourself and your loved ones, then ensuring they are financially secure in the event of your untimely death or loss of income should be your top priority. Life insurance is not just a safety net—it’s an essential part of a comprehensive financial plan, especially for those living abroad.
Life insurance needs vary greatly depending on where you are in your financial journey. For instance, as a young professional just starting out, you might not have significant debts or financial dependents, making your need for life insurance minimal. However, this situation can change rapidly as you progress through life.
Life Insurance Needs Throughout Your Life
As your career advances, you may take on a mortgage to buy your first home. This new liability often necessitates life insurance, with some lenders even requiring a policy as a condition of the loan. The stakes become even higher when you start a family. If you are the primary breadwinner, the need for life cover grows exponentially. The thought of leaving your family financially vulnerable after your passing is something no one wants to consider.
In retirement, life insurance can also play a role in estate planning, helping to reduce potential inheritance tax liabilities for your heirs.
The amount of life insurance you need changes as your financial circumstances evolve. Determining the right amount of coverage is not as simple as it might seem. While online calculators can provide a starting point, they don’t take into account your unique situation, such as how much of your disposable income you can realistically allocate to premiums while balancing other financial goals.
Life Insurance: A Critical Component of Expat Financial Planning
For expats, life insurance should be an integral part of the financial planning process. However, it’s often overlooked. Many expats do not have life insurance, possibly due to the perceived high cost or the challenges of securing a policy while living overseas. Financial planning in general is frequently neglected by expats and internationally mobile professionals who struggle to find quality advice that caters to their unique lifestyle.
In the UK, life insurance is widely recognized as essential and is actively promoted by the government, resulting in a competitive market with a wide range of affordable policies. Unfortunately, the international market is different. Expats often find life insurance to be much more expensive compared to UK rates. This can be attributed to several factors, including the perceived higher risk of living in certain foreign countries.
Challenges in the International Life Insurance Market
The higher cost of life insurance for expats is not solely due to increased risk. A significant issue is the limited number of providers offering international policies, which drives up prices. Additionally, the market has historically seen the promotion of policies that build an investment value—products often sold by commission-driven salespeople more interested in meeting targets than providing value to clients. These policies generally offer poor value both as life insurance and as a savings vehicle.
The Good News for Expats
Fortunately, the landscape is changing. International life insurance providers are now offering more competitively priced policies tailored to the needs of expats. These policies provide good value and better coverage options for those living and working abroad.
As independent financial advisors we are committed to complete transparency. Our only priority is finding the best solution for you. We are part of a well-established group with a 20-year track record of innovation and client-first service.
If you already have a life insurance policy, it might be time to review your coverage and premiums. With new options available, you could benefit from better value and protection.
Review Your Life Insurance Today
We’ve made it easy for you to assess your life insurance options. Simply fill out our form, and we’ll get back to you within 24 hours with a personalized quote. Don’t leave your financial security to chance—ensure you and your loved ones are protected, no matter where life takes you.