By taking out a life insurance policy, you’re making sure your family are protected if the worst should happen and you die. And if you’re the main bread winner, it’s even more important. Whether you’ve taken out the plan to cover a mortgage or simply to give your dependents one less thing to worry about at a time of great stress, it’s always worth considering. After all, it’s not really for you, but mainly for those you leave behind. Saying that, with most insurance policies you can choose to include critical illness and terminal illness benefits that you may find invaluable.
When it comes to choosing life insurance cover, there are quite a number of options, each with its own benefits. In general, the most popular choices are term and whole of life insurances. The main difference is that a term insurance only covers you for a prespecified term, whereas a whole of life insurance lasts all your life. Your current situation and likely future position will determine which of these is best for you.
Level term assurance – is about the most basic type of life cover. You pay a fixed amount for a set term, during which it will make a full payout if you die.
Decreasing term assurance - the payout reduces over the term, eventually to nil, which means it’s usually used to cover a repayment mortgage balance.
Renewable term assurance – is usually a short-term plan of up to five years and commonly used to protect company directors. Importantly, you can renew it at the end of the term without another medical.
Reviewable term assurance – again, this is usually a short-term plan. It starts off at a lower premium, but each year this premium is reviewed and, more often than not, increased based on your age and the higher risk that involves.
Whole of life insurance - this insurance pays a guaranteed sum if you die and, as the name suggests, it covers you for the whole of your life. Your premiums are invested in funds that pay out when you die or you can cash them in earlier.
All of these plans can include terminal illness and critical illness benefits as well.
How insurers charge you for life insurance
Insurers take a number of factors into account when calculating how much your premiums should be - how much cover you want, how long you want it for, where you’re living, your age, sex, occupation, medical history, current health and smoking habits. This means it’s generally cheaper to take out a plan when you’re younger and your health is better.
Can you take it with you?
As an expat, you’ll want to know whether you can take this cover with you if you move countries and still have the same level of cover. The simple answer is that it depends on each insurance company and their view of the risk this involves – some countries are far riskier then others. A few companies will let you take it with you as long as you were completely unaware you may move abroad at the time you started the plan. Companies like Legal & General and Norwich Union do, among others.
International insurance expert Peter Bellwood of Bellwood Prestbury International says “Knowing you can take life cover with you from country to country is an important consideration if your work means you’re regularly moving countries. Most expats don’t allow themselves the time to find the best insurance for their needs, but rather get the cheapest or the first they see. That’s where an international broker can really help. You can save time and especially money in the long run by not having to keep cancelling the old plan and starting a new one every time you move. The best life insurance cover is the one you can start and almost forget about, wherever you are, but always knowing it's there for your family if you die.