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Life Insurance for Expats

Life Insurance for Expatriate Australians and Migrants

The Current Status: Life Insurance for Australian Expats

At this point in time, no Australian life Insurer is prepared to provide individual life insurance cover to expatriates. In the past, Insurers have declined to provide cover where expatriates have been resident in countries where the Australian government has advised citizens “not to travel or reside”; referred to as DFAT level 4. With effectively all countries outside Australia now falling into DFAT 4 insurers have taken the approach of refusing cover for anyone outside Australia.

More remarkably, we are finding cover refused if there is any intention expressed to travel outside Australia, whether permanently, for business purposes or for tourism - even though Covid 19 related illnesses would be specifically excluded in any cover.

The Australian, and indeed worldwide, life insurance industry has come under enormous pressure as a consequence of Covid 19 and we hope that many of the above changes represent a short term response, with conditions hopefully more flexible next year. In any event, what is clear is that premiums will rise in the short term and any unusual risks will either be excluded - as is the case for expats - or attract significant additional costs. The only option available to expats may be to pursue cover through local Insurers - whether this is a real option will depend on your country of residency.

Life Insurance in "Normal Times"

Moving overseas, together with marriage, having children and starting a business, should be one of those occasions on which you should review whether the adequacy of your life insurance cover. Life insurance is a fundamental "building block" within any financial planning strategy because it protects your family against the risk of premature death or ill health, and the sometimes catastrophic financial consequences. Arguably, you should have plans in place both to protect your life (and that of your spouse or partner) and your income, before you move onto considering other investments.

Reasons for reviewing your life insurance cover before proceeding overseas include the following:

Your existing life insurance may not provide cover if you become resident overseas, or it may expire after a certain period of non-residency
Expatriate assignments can mean that families become more reliant on one, higher paid, income
Your income and cost base will often increase as a result of expatriation; to include private schooling, international health insurance and potentially the maintenance of overseas property, and
Any (unplanned) return to Australia because of death or health issues will result in additional costs

If you are on an employment contract overseas, then the amount and quality of insurance cover provided by your employer is an unexciting, but nonetheless very important aspect, of your salary package. Employers have an increasing tendency to provide money in lieu of services to expatriates where it is tax effective and, typically, corporate life cover is limited to one or two years employment income - which is totally inadequate cover in family situations.

If your employer does not provide a robust level of cover it is up to you to enter into personal arrangements which provide sufficient additional cover - life insurance should not be considered an optional expense. The emphasis should be on arranging comprehensive, quality cover which represents good value; preferably before you depart Australia.

Many Australians rely upon life insurance provided through superannuation funds - this is group cover that typically provides satisfactory, good value cover to resident Australians. However, it is renegotiated between superannuation funds and Group insurers on a regular basis and coverage can change - not typically in "core areas" but, occasionally, in peripheral areas that could impact expatriates. Generally, we don't think that the cover provided by super funds provides adequate security for expat Australians compared to individually arranged cover.

Arranging Life insurance

We provide an overview of some of the more commonly available types of life insurance and the options available to expatriates seeking new or additional life cover. You should seek professional advice if you are seeking life insurance, particularly as an expatriate, because of the various additional complexities which could impact cover - including the fact that cover may not be available in your host country.

Exfin provides no obligation access - via the Inquiry form at the bottom of this page - to life insurance brokers in Australia and worldwide who are familiar with the particular issues surrounding both the coverage of Australians while overseas. Our approach is to try and arrange coverage through Australian insurers and brokers first - because it is usually more cost effective and provides continuity on return to Australia. If this is not possible, and Australian insurers may decline to cover expats working or resident in certain countries or occupations, then coverage is almost always available through arrangements with International brokers and insurers.

If you would like to arrange professional advice please complete the Inquiry form below providing details and you will be contacted promptly. You will receive a fee quotation in advance of any advice or services being provided.