What to do about life cover when living abroad

*This content is brought to you by Brenthurst Wealth

By Leslie Greyling*

Working abroad has many advantages for South Africans who have the skills and the drive, but possibly not the opportunity to earn what they’re worth. This means that a greater number of those with skills are earning their living overseas, even though their life still has deep domestic roots.

This ‘dual lifestyle’ can be financially rewarding, but also more complex than if you simply earned and lived in one location. For instance, working and living abroad doesn’t mean you’ve cut all ties to South Africa. You might have a house that your rent out while living elsewhere, which means you’ll still have a local mortgage and bank accounts. And possibly even credit cards and other rand-denominated loans.

And like any financially-responsible person you probably have insurance in place. Definitely home-owners’ insurance, and hopefully also a life policy of some sort. Insurance is often seen only as a grudge purchase, rather than the risk mitigation tool that it is. The protection that you’re buying, after all, is against loss of capital or income due to an unplanned event because if you don’t have protection, you may have to dip into your investments to cover the expenses.

Which is why it makes sense to hold onto key insurance policies, even if you’re working and living thousands of kilometres from home.

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Cross-border applicability

A question that I often face from clients who are moving abroad to work is whether their life policy will still be valid, and needed, once they’ve relocated.

In most instances, policies remain valid even if you’re living or working outside the country, as long as the premium can be debited from a South African bank account, and the benefits paid into a local bank account.

Be aware, though, that the insurer covering your for life, disability and severe illness will take into consideration that you’re working abroad. Depending on the risk rating of the country – Canada’s profile would be very different to Ukraine’s at the moment – you could be subject to a loading or exclusion if the risk is considered greater than if you had remained in South Africa.

It is advisable, therefore, to inform your insurance company, in writing, if you’ll be working and living in another country.

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What you need to tell your insurer

In order to accurately assess the level of added risk you’ll be exposed to, the insurer will ask for more detail on your foreign travel and work plans. Likely questions include the length of stay, where you’ll be living, the availability of medical facilities, and the nature of the stay. 

Because of the extreme risk involved in certain countries, cover could be specifically excluded. The likes of DRC, Iran, Libya, North Korea, Somalia, Sudan, Afghanistan, Iraq, Mali, Russia, and Ukraine are often on this list, which is changed regularly so it helps to check with your insurer first to confirm.

If you are permanently living abroad, and have an offshore bank account, you might consider dollar-based life cover that is available from some insurers to South Africans.

The advantage of a dollar-based policy is that you pay this annually in USD from your offshore bank account, with benefits paid out to the same account and in the same currency. 

A policy like this is most suitable if you have offshore liabilities and assets like properties and business interests. It is also an appropriate option if the beneficiaries of the policy, presumably your family and loved ones, are also living abroad. Getting paid in a hard currency into a dollar-denominated account goes a long way to simplifying matters for them.

As with any financial decision that impacts your and your family’s future, it doesn’t pay to take a chance. If you’re unsure, speak to your financial advisor to help you find the right solution for your particular circumstances. 

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