The Crucial Role of Insurance in Your U.S. Expat Financial Strategy

In recent years, clients have increasingly sought to incorporate diverse risk management strategies into their overall wealth planning. Notably, 79% of investors now anticipate that their wealth advisor will provide insurance solutions.

If you are an American living abroad, collaborate with your expat fiduciary advisor to assess whether the following insurance options are appropriate for your personal financial situation.

1. International Life Insurance

Life insurance can offer reassurance by ensuring your loved ones receive a tax-efficient benefit to cover their expenses after your death. Americans residing abroad can also access life insurance, but there are several key factors to consider before purchasing a policy.

• International Benefits: Generally, a U.S. based life insurance policy will not provide benefits to your loved ones if you relocate overseas. However, if you maintain a residence in the U.S. and complete the underwriting process within the country, some insurers may still cover you. If this isn’t an option, securing international life insurance coverage is crucial.
• Tax Considerations: When choosing a life insurance policy, it is vital to consider your specific tax situation and how the tax laws of your current country interact with U.S. tax requirements.
• Local Laws: Every country has distinct laws and regulations governing insurance products. It’s essential to understand local regulations regarding terms, tax liabilities, and the availability of life insurance products.

2. International Health Insurance

Depending on your residency and employment circumstances, you might qualify for public health insurance coverage in your country of residence. Some countries automatically enroll employees in the national plan if they are actively working for a company.

However, if your current country lacks public health insurance or provides insufficient coverage for your requirements, purchasing private health insurance becomes necessary. Fortunately, numerous excellent health insurance plans cater to Americans residing abroad.

Typically, there are two primary options for coverage:

Local coverage – Local policies furnish coverage within a single country, resembling the services offered by a U.S.-based plan, encompassing:

• Preventive care
• Physician consultations
• Hospitalization
• Prescription medications
• Emergency medical assistance
• Wellness services

It’s crucial to acknowledge that local policies commonly do not cover medical treatments once you return to the United States. If you anticipate frequent or prolonged visits to the U.S., opting for worldwide coverage might be more advisable.

Worldwide coverage – Comprehensive healthcare policies extend coverage to medical expenses regardless of location, encompassing the United States as well. While global policies typically incur higher costs compared to international ones, for numerous expatriates, the additional expense proves worthwhile due to the extensive protection it affords.

3. Expat Disability Insurance

For individuals employed abroad, contemplating an expatriate disability insurance policy could be prudent. Such policies provide financial support to sustain your family’s livelihood if you experience disability and are unable to work temporarily.

Expatriate disability insurance is particularly suitable for individuals who:

• Serve as the primary income earner for their families
• Reside in a nation that lacks universal welfare provisions for disabled expatriates unable to work
• Encounter heightened personal or occupational hazards that heighten the risk of accidents or disabilities

4. International Long-term Care Insurance

Usually, long-term care (LTC) insurance based in the United States does not extend benefits beyond the country’s borders. This implies that if you possess an LTC policy, it might not remain applicable after relocating overseas. In some instances, insurers might offer partial benefits for care received in another country, but such coverage is often restricted to a limited duration. Nevertheless, LTC policies frequently prove ineffective abroad because American insurers lack mechanisms to remunerate services provided by another nation’s public universal healthcare system.

It is imperative to meticulously assess your policy to ascertain its suitability for your status as an American expatriate. The “Exclusions and Limitations” segment of your policy should delineate international coverage provisions and limitations.

Depending on the expenses associated with care in your current residence, you might not necessitate an LTC policy to cover assistance with daily living tasks such as eating, dressing, and bathing. Alternatively, you might qualify for public coverage to assist with these services.

Regrettably, finding an LTC policy that extends benefits to Americans residing abroad can be challenging. Hence, collaborating with a competent expat financial advisor becomes crucial. Such professionals can aid in evaluating your alternatives and devising a strategy to cover potential long-term care expenses that aligns with your financial plan and budgetary constraints.