fbpx

Educational Materials

for U.S. Expats

Can I Buy Life Insurance as an Expat Post-COVID?

Jun 11, 2020 | Expat News, Investment Concepts

A crucial part of financial planning for many families is constructing an effective insurance solution to ensure that their long-term goals can be met, even in the tragic case of an unexpected death. However, as we’ve mentioned in a previous blog, such solutions are often complicated by living abroad, particularly when it comes to underwriting insurance.

As a firm, we do not sell insurance, but we do work with a variety of brokers to discuss insurance options for our clients, and all have indicated that right now, insurance companies are having a harder time pricing the risk of life insurance for their clients in a post-COVID world– particularly where those clients have international exposures.  

Before examining the expat specifics, one should note that this has changed insurance not just for Americans abroad, but also for Americans in the United States. Insurance is – essentially –  math and actuarial tables. Insurance companies using demographics, general country mortality, health and other factors, calculate your expected life expectancy based on actuarial tables in order to calculate your monthly premium in a way that will ensure the insurance company does not go out of business. Unfortunately, the inputs for general country mortality and “other factors” have been skewed by the global pandemic and currently insurance companies may not necessarily “trust” their own actuarial tables. Consequently, the insurance market may tighten as insurance companies either charge more to protect themselves against an unexpected and unquantifiable risk, or simply limit the policies they are underwriting or issuing.

In the past, many insurance companies were happy to underwrite Americans abroad in certain cases: for instance, they were able to come to the United States to submit to the policy health exam or could physically take delivery of the policy in the United States. As a result of the underwriting policies changes in the wake of COVID-19, many insurers may not be as worried about the expat angle than the issues of travel and generalized risks such as increased exposure to viruses or other communicable diseases. Consequently, we likely will see a drop in the number of companies who are willing to issue policies to Americans outside of the United States (particularly whole life policies) along with an increase in costs and restrictions (sometimes underwriting policies will require the insured to stay in the United States longer or not travel for a defined period of time).  

Unfortunately, there aren’t easy solutions to these problems at the moment. The general principles from a financial planning perspective remain the same and at the heart of our decision making process is weighing the needs for insurance versus the costs both in terms of health and any additional “hoops” required to obtain a policy. Additionally, we find that working with a broker that can quote a variety of companies rather than just a select few (or only one!) is very important, especially for expats. Ultimately, like so many things in our post-COVID world, we must wait and see, proceed cautiously, and be creative in our solutions.

Keith Poniewaz

Walkner Condon Financial Advisors is a registered investment advisor with the SEC and the opinions expressed by Walkner Condon Financial Advisors and its advisors in this piece are their own. Registration with the SEC does not imply a certain level of skill or training. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice.

Information presented in this piece is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed.

Information in this piece does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Readers are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.