Who should use life insurance? In short, anyone who has responsibilities should have life insurance. For example, if you are thinking of having children or already have one on the way, you should strongly consider life insurance. If the unthinkable happens, would you want your children to miss the opportunity of a proper education because they are unable to afford it?
Anyone with a mortgage or loan should also consider coverage. Is your wife or partner able to maintain contributions if something were to happen? How would you feel if the family home was forcibly sold? Finally, if you are the owner or a senior manager of a company, what will happen if you were not around? Could your company continue without you? You might need to consider any transition or “wrapping up” costs in your life insurance estimate, on top of what your family needs to continue their standard of living. Even closing down a company immediately can cost a significant amount of money.
But isn’t my life insurance back home enough? This is one of the biggest and most damaging myths for an expatriate. More than 90% of life insurance sold in domestic markets covers people only when residing in their home country. It does not include international coverage. Many life insurance companies in home countries have been known to waive aside concerns by saying that coverage for business trips are fine. Insurance companies do not consider expatriates to be on extended business trips if a payout is under question, so if your domestic policy does not cover you, what is?
Our advice is to check the wording of your contract and accept only written, not verbal, advice from your life insurance company. You may be paying your premiums for nothing. Luckily life insurance built for travelling expatriates is available.
Life insurance is only for older people? Thirty-seven years of age is not elderly, yet the chance of dying increases over 1.2% each year and rises accordingly thereafter. This means there is over a 25% chance that one may not make it to 55. A one in four chance is not small, and although accidents happen, more than 80% of early deaths come from natural causes, not accidents. The odds are still in your favour but do you want to gamble with your family and children’s future instead of saving one or two hundred dollars per month?.
How much coverage should I get? It is generally considered that the average person should have coverage worth 6-8 years salary to look after their family properly. If you would like your child to have the option of studying at a top American university, then you would need considerably more. Those who own and run businesses may need more coverage for the potential costs of a business sale or an organised “wrapping up”, and coverage of $2 million or more may be necessary.