Risk Management for Americans Abroad
In recent years, clients have become more interested in integrating a wide range of risk management strategies into their overall wealth planning strategies. In fact, 79% of investors now expect their wealth advisor to offer insurance solutions.
At Creative Planning International, we’ve always taken a comprehensive approach to helping ensure all aspects of our clients’ financial lives are working together to accomplish their goals. This includes helping our clients manage a wide range of risks with insurance solutions to meet their needs.
If you’re an American living abroad, work with your expat fiduciary advisor to determine if the following insurance makes sense based on your personal financial situation.
International life insurance
Life insurance can provide you with the peace of mind of knowing your loved ones will be supported with a tax-efficient benefit to help cover their expenses following your death. While life insurance is available to Americans living overseas, there are a few important considerations to keep in mind before purchasing a policy.
- International benefits –Typically, a U.S.-based life insurance policy won’t provide benefits to your loved ones once you move overseas. However, if you continue to maintain a residence in the United States and complete the entire underwriting process in the United States, some companies may insure you. If that’s not the case, it’s important to ensure you have international life insurance coverage.
- Tax considerations – As you decide on the structure and benefits of a life insurance policy, it’s important to consider your unique tax situation and the interaction of your current country’s tax regime with U.S. tax requirements.
- Local laws – Each country has its own unique laws and regulations guiding insurance products. It’s important to understand local regulations regarding the terms, tax liabilities and availability of life insurance products.
International health insurance
Depending on your country of residence and employment situation, you may be eligible for public health insurance coverage. If you’re actively working for a company, you may even be automatically enrolled in the national plan.
However, if your current country doesn’t offer public health insurance, or the coverage is inadequate to meet your needs, you may need to purchase private health insurance. The good news is that there are many great heath insurance plans available to Americans living overseas.
There are generally two options for coverage:
Local coverage – Local policies provide coverage in a single country that’s similar to the coverage you’d receive with a U.S.-based plan for services such as:
- Preventative care
- Doctor visits
- Hospitalization
- Prescription drugs
- Emergency medical care
- Wellness
It’s important to note, however, that local policies typically don’t pay for medical treatments once you’re back on U.S. soil. If you plan to travel back to the United States on a regular basis or for extended periods of time, it may make sense to purchase worldwide coverage instead.
Worldwide coverage – Worldwide healthcare policies help cover medical expenses regardless of where you are, including in the United States. Worldwide policies tend to be more expensive than international policies, but for many expats, this extra expense is worth the protection it provides.
Expatriate disability insurance
If you’re working overseas, it may make sense to consider an expatriate disability insurance policy. These policies provide funds to support your family’s living expenses should you become disabled and unable to work for a period of time.
Expat disability insurance typically makes the most sense for individuals who:
- Are their family’s main breadwinner
- Live in a country that doesn’t offer universal welfare payments to disabled expatriates who are unable to work
- Face elevated personal or professional risks that could lead to an accident or disability
International long-term care insurance
Typically, U.S.-based long-term care (LTC) insurance won’t pay benefits outside the country. That means if you have a LTC policy in place, it may not hold up to a move overseas. Sometimes insurers will pay partial benefits for care in another country, but only for a limited timeframe. However, LTC policies often don’t work overseas because American insurers have no way to pay for services provided by another country’s public universal healthcare system.
It’s important to carefully review your policy to determine if it will continue to meet your needs as an American abroad. The “Exclusions and Limitations” section of your policy should provide details on international coverage provisions and restrictions.
Depending on the cost of care in your current country, you may not need an LTC policy to cover someone to help with daily living activities, such as eating, dressing and bathing. Or, you may be eligible for public coverage that can help with these services.
Unfortunately, if you have a need for LTC coverage, it can be difficult to find a policy that provides benefits to Americans abroad. That’s why it’s important to work with a qualified expat financial advisor who can help evaluate your options and make a plan to cover potential long-term care expenses that’s in line with your budget and overall financial plan.
Are you a U.S. expat who could use some help incorporating insurance into your overall financial plan? We’re here for you. At Creative Planning International, we specialize in helping U.S. expats and cross-border families maximize their wealth and avoid costly mistakes. We understand the unique risks you face as an American abroad and help develop insurance and wealth management strategies to help you manage them. Because we serve in a fiduciary capacity, you can be confident we’re acting in your best interests. To learn more, request a meeting with a member of our team.
