If you and your family have been living in different countries for the past few years, or if you foresee yourself living in different countries in the future, you’d want to protect your families and assets from unexpected misfortune events. An international life insurance policy helps you to do just that.
In this article, you can learn the answers to the following questions:
• How does life insurance work for expats?
• How are international life insurance premiums calculated?
• How much coverage will you need?
How does life insurance work for expats?
An international life insurance policy ensures that your family receives a lump-sum payout should you die while travelling or living abroad. This means that your family or loved ones receive extra financial security that will certainly be needed in your absence. It is important to note that many domestic life insurance policies may not cover events that occur internationally.
One of the most common life insurance structures applicable for expats in Malaysia is term life insurance.
Term life insurance
There are times in life when a large amount of insurance may be required, such as when your children are still young, or you have a loan or mortgage on a property which is substantial. If something unfortunate were to happen, you would require enough financial support to cover your growing family and cover all associated debts plus living expenses for your loved ones. However, during the later stages in life, once your debts and mortgages are paid off and your family is well on their way to living an independent life, you may require less coverage. This is where a well designed Term Life Insurance policy is highly beneficial.
The term life insurance policy is constructed to accommodate your unique financial circumstances and plans. An example of this would be where a client may take out a policy for a set number of years to coincide with the age of their youngest child. When this child reaches the age of 18, the term expires and the insurance is no longer in place - and the premium is no longer a cost to be paid.
Read more: Introduction to International Life Insurance
How is the cost of international life insurance calculated?
Regardless of the type of life insurance you choose, the cost, referred to as the premium, will be determined by the following factors:
• the monetary value of the coverage you want.
• your age.
• your health (your health is evaluated through a thorough declaration and/or the requirement to undertake a medical examination) - Insurance companies typically require applicants to fill out a medical history form and, in some cases, a brief medical exam to determine health conditions.
• other key factors, such as whether you smoke or not.
How much coverage will you need?
The International life insurance chosen should cover an expat's immediate expenses and be available to aid in the financial transition as remaining family members adjust to a new life if something unexpected occurs. This is why there is no “one size fits all” solution.
In the short term, international life insurance covers funeral expenses and can give families the support they need to take time off work.
In the medium term, life insurance should cover debts and liabilities such as mortgages or car loans. This takes the pressure off loved ones or family if they do not have the income to support these liabilities.
Other financial considerations exist in the long run. Let's say, if one partner earns significantly more than the other, the long-term financial well-being of the surviving partner should be considered. Similarly, if one parent is not working, families should consider the cost of maintaining their lifestyle and education choices. Ongoing expenses such as school fees and the cost of having a family helper can be factored into the insurance coverage.
If you're looking for trusted financial advisors to guide you on investing in suitable private life insurance for expats in Malaysia, get in touch with Melbourne Capital Group today. You may also email us directly at info@melbournecapitalgroup.com.
Read more: How to Plan your Child's International Education in Malaysia
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