Life Insurance: Options available to Australian Expatriates
1. Australian Life Insurance
Prior to the Covid pandemic, it had gradually become easier to arrange life insurance for Australian expats through Australian insurers. However, conditions changed rapidly with the onset of the Covid pandemic and arranging cover with an Australian life insurers can only be currently described as difficult in many situations - with current expatriates needing to be moving back to Australia in the short to medium term, able to have the documentation signed in Australia and be located in a country with an appropriately DFAT country rating.
Consequently, the emphasis needs to be on ensuring that expatriates arrange the appropriate level of cover before they become non-resident. Expats with existing Australian life insurance may continue to be leligible for cover while overseas, but this needs to be confirmed with their insurer in writing before you proceed overseas, because there are circumstances where cover will not continue.
The next question is then whether it make sense arrange to cover through your superannuation fund, if available. Life insurance cover within superannuation is often attractive in Australia because premium rates are sometimes, but not always, lower than those available directly from insurers on an individual basis. However, both the premium levels and the precise cover made available are subject to regular renegotiation with insurers - and we don't believe this provides adequate security for expatriates.
2. "Host" Country Life Insurance
You can seek life insurance cover in your host country from a reputable firm. This may be the preferred solution if you are likely to remain in the host country for a very long period of time, even perhaps permanently, and your future costs are likely to be in the local currency. If, however, on any premature death the family’s long term costs are likely to be largely Australian dollar related (for education, housing, support) then you are taking an exchange rate risk and, in some countries, your family’s ability to transfer any payment out of the country. Additionally, in developing countries, the local premium rates are likely to reflect lower life expectancies and higher country risk.
3. International Life Insurance
There are circumstances where it may be appropriate to consider international or offshore life policies. These are policies issued outside of national jurisdictions and are available in a range of major currencies. If you intend being overseas for a number of years these may be a good fit, but this should be the subject of discussion with a professional adviser to ensure that they fit your personal circumstances and that there are no untoward tax or other consequences.
Carefully review the premium rates against alternatives (they can sometimes be high) and consider the possible impact of any currency movements on both premium payments and final payouts. Policies of this nature are often sold as "pseudo" investments offshore and considerable care is recommended.
If you would like to arrange professional advice please complete the Inquiry form below providing details and you will be contacted promptly.