| Life Insurance for Expatriates  Policies designed for UK Expatriate community UK based advisors (not a call centre) Wide policy wording responding to local needs Immediate cover (by email) if required - Fast Policy issue | | | | Guide to Expatriate Life Insurance (Part 2) (Part 1) Term Life Insurance - This is usually the cheapest form of life insurance or protection cover insurance you can obtain and in recent years premiums have dropped considerably and there is much competition in the market. Why is it cheap? Well it only pays out if you die. If at the end of the policy period you are still alive, the contract lapses with no payout. Seems like a good deal doesn’t it, you never get to see the benefit? That aside, this type of insurance policy provides vital protection for your family if you die within the policy term. If you do die the policy will provide an immediate cash benefit. This type of policy offers pure protection cover and should be considered before all other types of contract that will pay you out an amount of money at the end of the policy term. (Such as an endowment contract). Term life insurance or call it basic protection cover if you like exists in a number of different disguises.
Level Term Insurance - this is the basic straight forward policy which will pay out a fixed sum insured if you die before the policy matures. It you choose a sum insured of £50,000 and you die within the term of the policy your beneficiary will be paid out. The £50,000 would be paid out at any time throughout the policy period regardless of how long the policy had been in force and how much premium had been paid. If death occurs, the policy is paid up and no further premium is required.
Renewable Term Life Insurance - this type of Term Life Insurance gives you the right to increase the amount you are insured for at various stages throughout the contract term, for example every 5 years. This facility is usually available if you can sign a declaration for the insurance company stating that there have been no new illnesses since the inception date of the contract. Of course the amount you will have to pay each month will increase as you put the sum insured up.
Convertible Term Insurance - this is a more flexible version of the term life insurance policy and if you have this type of contract, you will be able to alter the policy from its basic set up to either a whole life policy or an endowment. This type of policy can be very useful as if you convert to a Whole Life policy, the contract will eventually pay out. The insurance company will not be able to treat you as a new customer thus if you develop any illnesses in the ensuing years, the insurance company will be unable to penalise you. Whole life insurance polices is just that, they are for the whole of your life and there will be a payout at the end. (Providing of course you keep paying the premium or until such time as the insurance company state that they no longer have to be paid). If you wish you can elect to cease payments at a certain age (retirement age is fairly typical) you will continue to receive the benefit of the policy on death but the payout of course will be lower. If you decide to convert to a whole life policy or indeed effect one at the outset, you can choose between with profits and without profits. With profits whole life insurance is of course more expensive but each year a portion of the product providers profits are added to your policy and you payout will increase. Without profits contracts are cheaper and the sum insured will stay the same throughout the policy term unless of course you decide not to continue with payments after a certain date. Unlike normal term, life insurance contracts, whole life insurance policies do have a surrender value and although in the early years any surrender value will be very low, you can of course cash them in. Other options would be to make them paid up or to sell them to a third party company that may or may not offer you more money than the product provider. In some cases, you can also rains loans against the policy. Professional advice should always be taken before any alterations are made to this form of policy
Increasing Term Life Insurance - with this type of policy the sum insured increase over a period of time. This is usually up to 10% per annum and this type of term life insurance is very useful if you are worried about keeping up with the cost of living.
Decreasing Term Insurance - the name is a bit of a giveaway, As the name implies, this policy reduces the amount of the payout as time passes. This type of policy is popular for repayment of loans that reduce over a period of time. It is not suitable for covering an interest only mortgage which of course stays the same until it has run its course.
Endowment Insurance Contracts - so much has been written about endowment contracts over the last few years and most of it not favourable. Most persons first experience of this type of contract relates to the repayment of a mortgage loan but let’s explain the basic concept first. An endowment is a savings policy with the added benefit of Life Insurance included within the policy wording. The policy is for a set term and will provide you with a guaranteed sum insured if you die within the policy term. Each year a bonus is added to the sum insured and this increases the payout at the end of the policy term which should be higher than the basic sum insured. As well as the annual bonus, the insurer may decide to pay you a terminal bonus at the end of the contract term. The terminal bonus is usually quite high and its payout is saved until the end of the contract to prevent persons from cashing them in the early years. Low cost endowments used to be a reliable way of paying off a mortgage loan. Instead of taking a mortgage which paid back the interest and the capital, you agreed with the lender to simply repay the interest only. The savings you made by not repaying the capital amount of the loan were passed on to an insurance company in the form of an endowment savings plan. At the end of the policy term most insurers hoped that there would be enough money within the policy to not only pay off the mortgage but have a lump sum left over as well.
Alas endowments have not turned out to be a good way of repaying mortgages, designed in years when we were experiencing high interest rates, it was expected that they would easily provided the stated payouts on maturity. We have of course been experiencing relatively low interest rates for many years and thus insurers have not been able to secure the anticipated growth. There have been many cases of persons claiming to have been miss sold this type of contracts, however anyone understanding the correlation between interest rates and returns should have safeguarded against lower payouts by simply paying the money they were saving on their monthly interest payments in to a secondly savings account.
Endowments are a savings contract and can be also used for such things as school fees but should always be considered as long term savings plans. If you have to cancel the policy in the early years, you may not get back what you have paid in, thus cancelling an endowment policy should only be undertaken after much consideration.
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