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Life Insurance

it could be the best investment you make!

In general people don’t like life insurance. It may be that it reminds them of death, pushy salesmen or slippery insurance companies. People think that insurance companies don’t pay claims, the reality is very different. Most insurance companies pay more than 95% of all claims. The result is that most people are either underinsured or not insured at all.
 
Ironically if you have the right policy then it could turn out to be the best investment you ever make. What we mean by this is one that doesn’t have any invesment element to the policy. You should be paying for life insurance only and nothing else.
 
If you make a claim you’ll get a guaranteed return, well your dependents will. Your monthly investment for the amount you get back is very small. You’d have to invest a much bigger amount of achieve some pretty spectacular growth to match it.
 
All in all life insurance isn’t the waste of money that many people would have you believe.

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Direct Expat has years of experience and knowledge of dealing with expats and their finances. We've published a clear and concise guide to help expats make the most of their money. It's yours free of charge when you sign up for Direct Expat's updates.

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it could be the best investment you make!

Here are some of the most common reasons people have when it comes to them not getting their life insurance sorted out.

I don't need any life insurance because I don't have kids

Not having dependents may make life insurance less relevant to you. Though we may have financial commitments such as mortgages or loans. Your family or next of kin will have to pick up the responsibility for these debts if something happens to you. Even if you have equity in the property they will need to pay the mortgage until they can sell the property. Even in good property markets this could take 8 to 12 months if there’s a slump it may take years.
 
If you’ve made the commitment with your partner it’s possible that they can’t afford the repayments on their own. So don’t leave them in the lurch.

my parents would look after my family

Of course, your parents will help if they are able to. Though would they be able to provide all the financial support your family needed? Would this help be available for as long as they need it? Would this help come with any conditions and how would your family feel about it?
 
Having your own protection, the right policy gives your family certainty. They’ll know that they’ll have the financial resources when they need it.

I don't need life insurance yet, i'll sort it out when i'm a bit older

Unfortunately there is no simple rule that tells you when you’re the right age to take out life insurance. It has much more to do with circumstances than anything else. If you need cover then you should get it. The good news is that the best time to buy protection is when you are young, fit and healthy. Premiums will be cheaper and if you take a guarantee option you can fix the cost for the whole policy term.

I have life insurance through my employer

Cover through work can be a great benefit, though it has it’s limitations. It may not be enough to give you the cover that you need. Also you’ll only have it whilst your working with your employer. On average we change jobs every 5-7 years, so what happens if our next employer isn’t so generous. What if you move jobs and you’re no longer insurable?
 
Most people have no idea what benefits their employer provides. They know that they get something though have little idea on how much or what exactly. If you were seriously ill how long would your employer continue to pay you for and how much? What would your family get in the event of your death? Take a look at our life insurance calculator and see if it would be enough. Find out now before you come to need it and then it’s too late.

I've got savings that they could fall back on

You may have savings put aside and if your income stopped, how long would that money last your loved ones. If they had to cover all your bills, mortgage, food, transport & lifestyle costs would it run out. If you’re saving towards a goal like retirement or education fees, what if the saving stopped.

Do you have enough to fund these goals? If not then how would you replace these savings if your income wasn’t available.

The right life insurance will mean that you can be sure that your savings will be enough for your loved ones.

I set it up when i bought my house

It’s a good idea to review the cover you have and make sure that it still appropriate to your circumstances. If you moved overseas since then the likelihood is that your insurer won’t cover you now. As we mentioned earlier 90% of all domestic insurers end cover after a period of 3-6 months living abroad. So the chances are that you’ve been paying premiums for a policy that wouldn’t pay out if your family made a claim. You may have notified the insurer of new address and they haven’t mentioned anything. Unfortunately they won’t you need to ask them if cover on the policy extends to where you live.
 
What you need and why will change over time. It could be the amount of cover or the time that you need it for which changes. Instead of needing the cover to look after your kids you may now need the same amount to help with estate planning.
 
The other thing to consider is that the cost of cover changes. The trend over the past decade has been for the cost of cover to reduce. It’s worth revisiting your life insurance to make sure that you’re not paying too much.

make more of your money

Direct Expat has years of experience and knowledge of dealing with expats and their finances. We've published a clear and concise guide to help expats make the most of their money. It's yours free of charge when you sign up for Direct Expat's updates.

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