What You Need to Know About Foreign Travel and Your Life Insurance
Every life insurance company has a different view of international travel. Some life insurers penalize their customers or in some cases deny their life insurance application altogether because of their foreign trips, whereas others are much more lenient. We’ve put together a guide on foreign travel and life insurance so you can be informed on how foreign travel impacts your already existing policy or the application process of applying for one.
The Definition of Foreign Travel
Every life insurer’s definition of foreign travel is slightly different. However, usually, guidelines classify foreign travel as any trip for business or convention outside of Canada or the United States for up to three months every year. If you end up going for over three months in a year, then the life insurer will underwrite you as a Non-US-Resident or Foreign Resident, which usually will result in higher rates depending on the countries or country that you are visiting or living in.
Why Life Insurers Care Where You Travel To
Everything in life insurance is based on risk. If a life insurer accepts a new customer, then they have to measure the risk that that person holds for an early death. If you take out a policy and pass away two years later, then the life insurer will have to pay your family your claim, which will barely be covered through the premiums that you paid. Since travelling, especially to dangerous locations, comes with some inherent risks, insurance companies take it into consideration during the underwriting process.
How Life Insurers Decide Your Travel Risk
Life insurers determine your risk based on the place or places that you are travelling to. They take into consideration disease, standards of sanitation and public health, economic conditions, cultural attitudes towards safety and health, and the availability of medical facilities. If you are traveling to a country that has civil or military unrest or a civil war, then life insurers will consider those places extremely dangerous, and so you will be regarded as a high risk in the underwriting process.
Length of Time Before Your Trip is a Factor
Insurance companies also consider the length of time before your trip has been scheduled. If you applied for life insurance within one or two months of your travel plans, then life insurers will be a little more spectacle and will likely look at the factors of your travel more carefully. In some cases, life insurers may postpone your underwriting service until after you return. Due to this, if you are aware that you will be travelling international and want to be insured before you go, then it is best to start the underwriting process early.
Additional Life Insurance Requirements
No matter what your foreign travels situation, you’ll likely be able to find a life insurer that will accept your policy. That being said, in most cases you’ll be subject to additional guidelines. For instance, you must be legally residing in the US when applying for a policy. Additionally, you must complete the medical exam, all parts of the application, and fill out the contract within the US. On top of this, life insurance companies will want to see that you have ties to the US such as family, property ownership, or employment. Be aware that if you were born in a different country, then you may not be able to obtain a policy from the United States because some nations have laws preventing their citizens from purchasing life insurance anywhere but within their borders. These include Venezuela, Switzerland, Panama, Uruguay, Poland, Greece, Japan, Argentina, and Belgium.
What If You Already Have Life Insurance?
If you already have life insurance and are planning on travelling, then you may be wondering if your already existing life insurance will provide a payout to your family if something were to happen to you while you were abroad. The good news is that you will have coverage as long as the insurance was approved and issued before you planned your international trip. If you planned your trip before applying for life insurance, then this will be notated on your policy.
Is Supplemental Insurance Necessary?
It is not required to supplement your already existing life insurance policy if you are travelling with an accidental death policy. However, it can be a good idea depending on the risk factor of the country you are visiting. Accidental death policies pay out an additional amount on top of what your base policy pays, but only if you pass away in an accident. You may cancel this policy once you’ve returned from your trip without any penalties. Accidental death policies are much more lenient when it comes to approval because they do not provide coverage for deaths caused by health issues, only those that were a result of an accident.
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