Life Insurance

There is an adage within the life insurance industry that “life insurance is sold, not bought”; reflecting the fact that many people are both unwilling to contemplate their own mortality and pay the premiums which protect against its impact.

Yet, life insurance constitutes a fundamental part of any financial planning strategy because it protects your family against the risk of premature death and the sometime catastrophic financial consequences. Arguably, you should have plans in place both to protect your life (and that of your spouse) and your income, before you move onto considering investments. Expatriation, together with marriage and having children, should be one of those junctures at which you consider whether you have adequate cover, and indeed whether your existing cover applies if you are non-resident.

It is not possible to provide a simple guide as to how much life insurance you should have – it will vary widely depending upon your personal circumstances such as age, gender, family and existing net assets. You might hear some commentators suggesting a sum equivalent to between 5 and 8 times your annual income but this should really be the subject of a discussion between you and a professional advisor. You also need to consider the insurance protection afforded spouses and whether you should consider critical illness cover – since the financial impact of a prolonged illness can actually be more dramatic than a premature death.

If you are on an employment contract overseas, then the amount and breadth of insurance cover is an unexciting but nonetheless 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. However, this is one situation where employers will normally be able to source coverage much more easily and at considerably lower cost than individuals through a group scheme.