Life Insurance for Expats
Life insurance pays a lump sum on death. This can pay off outstanding debts such as mortgages, help with future commitments such as school fees or help provide vital income if the household breadwinner is no longer there to provide. You can also use this to protect your investment property portfolio so that in the event of death the mortgages are paid off and the family can have another income stream free from financing.
Expatriate critical illness with disability cover like life insurance with critical illness and permanent disability cover provide a lump sum payout of diagnosis of a critical or terminal illness or it you become permanently disabled. A lump sum in this situation can cover difficulties in the insured’s well-being. It can pay for home nursing, for medical expenses or give you the option to give up work to concentrate on getting better or enjoying life.
Expatriate income protection cover will if you can’t work due to medical reasons pay you an income until you get better and return to work or reach a selected retirement age. Income protection is an insurance that will help you maintain your current standard of living. It will provide you with an income that will assist in the unfortunate event of being made unemployed. It can be used to pay mortgage or rent commitments or help to pay all your other insurance and savings/pension plans.
Top 8 reasons to have life insurance
How much is enough?
The death of a married breadwinner with children could cause severe hardship for the surviving family members. Protection will ensure sufficient funds are in place at the right time for the well-being of the family.
Mortgages and debts
Banks used to insist on borrowers taking out life insurance to cover loans. No one wants to leave the surviving members of the family with debts particularly if the bank recalls the loans forcing sale of assets.
For the supporting spouse
What would the breadwinner of a family do if their spouse passed away leaving children to be looked after? Would they want to continue working and therefore need to employ support or indeed would they wish to cut back on hours worked to spend time at home? Either way there would be a ‘cost’ to cover that is often overlooked.
All too often a person’s estate on death is frozen or payments to beneficiaries delayed through the process of obtaining probate. A simple life policy under trust for a named beneficiary will pay a sum quickly and easily to that person providing short term cash flow benefits.
Key Person/Expat Business
Many SMEs rely heavily on one or two key employees and an unexpected loss of a key person overnight could cause big financial problems for a business.
Upon the death of a shareholder it is likely that the surviving family members would want the share of the equity paid out to them. A shareholder agreement with each shareholder being insured to the value of the equity held within the business is one way to ensure that the deceased shareholder’s family are protected and funds are available.
Business loan protection
Banks may lend money to a business by securing guarantees on the assets of the business. In the event of a death of a key person could give rise to the bank calling in the loan which in turn could have consequences for the business.
Inheritance Tax Planning
Plan for Inheritance Taxes (death duties) by arranging a life assurance to cover the liability. This is a simple yet effective way to protect asset value for the family.
And don’t forget
For most situations writing life cover within a simple trust will vastly improve the efficiency of any planning by making funds immediately available without probate delay. Keeping the value of the life cover outside of the estate for Inheritance Taxes and avoiding unnecessary challenges to estate distribution is a simple step you are either not aware about or forgotten.
*Always remember that with any type of insurance that full disclosure of previous or existing medical conditions is always recommended as failure to do so can result in a claim not being paid.
For details of the local examinations required to be able to offer Life & Protection products in Hong Kong please visit C.I.B website.