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 Life cover and protection

It is all too easy to overlook the need to protect you and your family should the unexpected happen. But have you ever consider how your family would cope financial if you were to die, or were to become ill. Do you just want them to "get by" if you die or do you want them to continue with the lifestyle you sought when you became an expatriate? Similarly illness can be just as, if not more financially devastating. Both these needs can be cheaply and easily even for expatriates, with simple policies which can cover almost any eventuality.

Protecting your family in the event of death

Life cover in the expat world works like it does the world over, if you die it pays out a lump sum of money. This can be invested to produce an income or the lump sum can be used to replace your income.

There are two basic types of life cover, term assurance, and whole of life.

Term Assurance – Term assurance for expats is available from a wide number of insurance companies. Term assurance has no investment element – you pay the monthly premiums and they provide a fixed amount of life cover for a fixed term. If you die during the term then the policies pays out.

Term assurance is the cheapest type of cover, and is ideal if you have a known liability for a fixed period, such as a mortgage or dependent children.

Whole of life – Whole of life cover is life insurance which provides life cover for the whole of your life. i.e. there is no fixed term, and providing you keep up the premiums it will pay out at some point in the future. This type of cover tends to be more expensive than term assurance. It has various uses, but one of its main uses is to provide cover to pay for an inheritance tax liability.

As an expat looking for life cover it is essential to find a provider which offers the most competitive rates, and one you can be sure will be able to pay the proceeds should the worst happen.

Protecting you and your family in the event of illness

Most of us with children or dependents, or a mortgage know we should have life cover to protect our loved ones. But have you ever considered what would happen if you were to become seriously ill or unable to work for a long period of time.

Your employer may provide sick pay for a number of weeks or months, but what would happen after that came to an end? Your outgoings would still remain. Perhaps you could use savings, or return to your home country. But what would happen once you had used up all of your savings, and if you returned home you would still have the problem of having no income.

A solution to this potential problem could be a policy which pays out in the event of an illness. There are two types of cover which can protect you and your family in the event of ill health, a critical illness policy or an income protection policy.

Income Protection

An income protection policy is designed to replace your income if you become too ill to work. The amount of cover is usually restricted to around 60% of your earnings. At the outset you would also decide when you want the payment to begin, and would select a “deferred period”.

e.g. Mr Smith earns £100,000 p.a., and his employer provides him with pay for a period of six months if he was unable to work due to accident or sickness.

Therefore you select a policy with a deferred period of six months, i.e. you would need to unable to work for six months months before the plan began to pay out. The longer the deferred period the lower the monthly payments will be.

Income protection covers you for almost every illness, and will pay out for as long as you are unable to work up until the end of the policy contract, which you would select to coincide with your retirement.

Critical Illness Cover

Critical illness works in a very different way to income protection. This type of plan is designed to provide a lump sum of money in the event of diagnosis of one of a number of specified critical illnesses.

The illnesses covered vary from company to company. The following lists shows some examples of the illnesses covered.

  • Alzheimers/Pre-senile Dementia

  • Aorta Graft Surgery

  • Bacterial Meningitis

  • Benign Brain Tumour

  • Blindness

  • Cancer

  • Coma

  • Coronary Artery By-pass Surgery

  • Creutzfeldt-Jakob Disease

  • Deafness

  • Heart Attack

  • Heart Valve Replacement or Repair

  • Kidney Failure

 

  • Loss of Limbs

  • Loss of Speech

  • Major Organ Transplant

  • Motor Neurone Disease

  • Multiple Sclerosis

  • Open Heart Surgery

  • Paralysis/Paraplegia

  • Parkinson’s Disease

  • Progressive Supra Nuclear Palsy

  • Stroke

  • Third Degree Burns

  • Total Disability Benefit

 

With a critical illness plan, the ability to claim does not depend on your ability to work, it is based on the diagnosis of the illness. So you could have a heart attack and return to work within six months. The policy would have paid out.

If you were unable to work because of stress then the critical illness cover would never pay out but an income protection policy would.

Critical illness is often used to protect a mortgage, and is often taken out in conjunction with an income protection policy. Although both provide benefits in the event of sickness, they offer different types of cover.

If you’re an expat, and want to ensure that you and your loved ones are protected in the event of your death or ill health, and want to discuss your options and get some free quotations without obligation then contact us to speak to an independent financial adviser for expatriates, on +353 874 641 868 or contact us online.  

 

 

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