A Guide to Life Insurance for American Digital Nomads

If you have life insurance but, as a digital nomad, find yourself abroad frequently, there are some issues with life insurance you can resolve in advance so that your beneficiaries do not have problems getting their claims paid.

Clearly, you have a life insurance policy – you would have stopped reading by now if you did not. And you have that life insurance because you want to secure the financial stability of your loved ones, or your business venture, after your death. But what if I told you that insurance companies take every opportunity NOT to pay death benefits? In fact, those companies only make money when they don’t pay. So, here’s a guide to the most common issues with life insurance coverage abroad, and what you and your beneficiaries can do about them.

It is common for a foreign death claim to be delayed or denied.

If you die while travelling out of the country, your beneficiaries file what is called a “foreign death claim.” The following problems frequently arise:

1.   You Die Within the Contestability Period or are Accused of Misrepresentation on Your Life Insurance Application.

The two years following the day your policy goes into effect is called the “contestability period.” In these first two years your insurer has the power to look into the information you submitted on your initial application, and if your insurer finds any omission or error in that information, they will deny your beneficiary’s claim – even if the omission or error was innocent, and/or had nothing to do with the cause of death!

Even the most inconsequential misstatement, such as stating that you are 5’6” when you are 5’ 5-½”,  gives your insurance company grounds to deny payment of death benefits. Caution your beneficiaries that if this happens, they should contact a national life insurance attorney right away.

You can prevent this by being sure to disclose everything and anything asked about on the application. Be sure not to omit any previous medical procedures or serious illnesses – disclose it all. You might be tempted to leave something out in hope of paying a lower premium… that is a recipe for having your beneficiaries’ claims denied.

Speaking of full disclosure… what do you plan to do while you are abroad? Insurance companies view visiting the Louvre much differently than climbing Mt. Everest. The bottom line is, if you die doing something risky that you did not disclose to your insurance company, you risk having your beneficiaries’ claims denied.

Just let your insurer know! Sure, they can raise your premiums but at least you know you will be covered.

2. Your policy coverage may not extend to visiting certain countries, or after a certain period of time spent abroad.

Look at your policy. You will see that your insurer has categories of destinations:  1) acceptable for travel; 2) acceptable for travel but with limited coverage based on time there, and; 3) unacceptable for travel.

Some insurance companies will insure you while visiting higher risk destinations, but your premium will likely go up. Be sure to look at the policy and consult with your insurance agent so that you know when and where you are covered under your policy.

How Long Will You Be Abroad?

This matters.  A brief trip of a couple of weeks or even months will probably not affect your life insurance coverage.  But if you plan to be abroad for more than 6 months, your insurer will likely consider you a “non-resident” and suspend your life insurance coverage.

Many U.S. citizens maintain two homes, one in the U.S. and one abroad.  If this is something you are interested in, do disclose your plans to your insurance company.  You will probably be able to get coverage, but the policy premiums will be adjusted based on the risk factors applicable to the country where your second home is located. Of course no insurance company can keep you from living half the year someplace they consider high-risk, but they sure can cancel your life insurance policy over it.  Talk with your agent about your plans.

How do you ensure that your beneficiaries are paid in the way you intend?  Full disclosure! Work with your insurance company now to make sure your insurance company does not work against your interests should the worst happen while you are travelling abroad.

About the Author, Veronica Baxter

Veronica Baxter is a writer, blogger, and legal assistant operating out of the greater Philadelphia area. She works frequently for busy Philadelphia life insurance attorney Chad G. Boonswang, Esq.

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