The importance of life insurance for expatriates
A savings and insurance product, a life insurance contract is an agreement between the insurer and the insured. In return for the payments made by the insured, the insurer undertakes to pay an annuity or a lump sum to the insured or their beneficiaries. There are, in fact, several types of life insurance contracts. The three main types are life insurance, death insurance and combined life and death policies. Life insurance offers a number of advantages, including lower taxation, which is particularly popular with expatriates, but also with local residents. This explains the success of life insurance as a way of saving and preparing for retirement.
Life insurance remains a reputedly safe investment, even in times of crisis. It offers expatriates an attractive additional income. Beneficiaries can make withdrawals or terminate their contract at any time. However, a minimum term of 8 years is recommended for a life insurance policy to be profitable. The capital can be converted into a life annuity, and assets can be passed on in a tax-efficient way.
Factors to consider when taking a life insurance
You should nevertheless pay close attention to the nature of the contract, starting with the beneficiary clause. This clause, which is included in life insurance policies, designates the beneficiary or beneficiaries who will receive the capital or annuity in the event of the policyholder's death. These beneficiaries must be correctly mentioned, and their relationship with the policyholder must be stated.
In the case of multiple beneficiaries, the policyholder must specify in the policy the share of each beneficiary. Although all policies offer a standard beneficiary clause, it is advisable to draw it up yourself, if necessary, with the help of a professional. A poorly drafted clause will be easier to challenge. It should be noted that the beneficiary clause can be changed at any time by the policyholder. In principle, the insurance company is obliged to advise you on the clause that best suits your profile.
Life insurance policies taken abroad also have to be carefully considered. In principle, these must be declared to the tax authorities of the country of origin; otherwise, they may be fined. Social security contributions may also be levied if a life insurance policy is taken out abroad. The presence or absence of a bilateral agreement between the country of expatriation and the country of origin must also be taken into account.
Finally, make sure to check the terms and conditions of the contract in the event of a claim abroad. You need to be aware of what is covered by the insurance and in what currency the payments will be made. In case of death overseas, is repatriation covered? Do the terms of the contract remain the same if you have relocated to a high-risk country (whether or not it is listed as such by your country of origin)? All these factors need to be considered before the move so that you can find the best possible solutions.
Life insurance remains a highly beneficial investment for both nationals and expatriates. Its simplicity and diversity in terms of operation (financing a project, diversifying savings, retirement plan, succession, pension plan, etc.) are reasons why it is in demand among expats.
