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The 5 Reasons Why You Must Have Life Insurance!

Clive Macdonald

Updated: Jul 4, 2024


Life Insurance For Expats

What We're Going To Do Today

We’re going to answer the question “Why do you need life insurance?”


You may thinks what’s the point, it’s a waste of money, I’m going to make enough so that I don’t need any.


What we’re going to show you is that it isn’t a waste of money and that there’s some very valid reasons for having it. In fact you'll realise that it’s money well spent and it's usually pretty good value. If you have a financial gap that needs filling then it's the perfect tool until you've made the money to fill it.


So here are the five reasons why we need life insurance.


But before we do that we want to quickly talk about this...


If you have life insurance that you set up back home or in another country. Then there's an 80% chance that your policy isn't going to cover you where you live now.


If you want to know more about this then read "Financial Assumptions Expats Make That Will Cost You Big!


If you want to be sure that your life insurance is going to work when it's needed then we can help.


Here's our "Expat Life Insurance Confirmation Pack".


It's completely FREE and has resources to help you confirm your life cover still works. Plus it gives you a step buy step guide of how to do that and gives you questions that you should be asking.


So CLICK the image below and get your's NOW!

Expat Life Insurance

Is There One That Applies To You?

Next we're going to take a look at the main reasons why you would need life insurance.


These are:


  • Replacing Income

  • Children

  • Debts

  • Estate/Inheritance Tax

  • Liquidity


There may well be one or more of these that apply to you it doesn't matter which. If there is and you don't have life cover then you need to get some.


Let's start to look at them one by one in more detail.


Using Life Insurance To Replace Your Income

As can often be the case with many expat families, there might only be a single bread winner in yours.


There's the obvious emotional impact of losing that person. Then there's the equally devastating financial impact of losing that income. Both of these would be brutal on your family.


This is especially true when there's children to feed, clothe and educate.


Having to raise kids on one’s own is demanding enough. Though, doing it when you're worrying how you're going to pay for everything. Well, on top of everything else this would be unbearable, right.


If you're not at a point where you've built up enough wealth and you've got people who depend on you. Then this is what they would face if they lost you and your income

Life Insurance For Expat Families

Life insurance helps end this worry and provides capital to replace that lost income.


Having life cover means there's financial resources available to your loved ones. If that policy is set up properly in the first place then this will happen almost immediately.


So, if you or anyone else in your family produces income that's essential to your household. Then it would be a great idea to insure it against loss.


Saving For Your Children's Future

You may have decided to save towards your children’s future.


Whether this is to help with tertiary education cost so they don’t get saddled with student loans. Or you could want to give them a solid start to their lives.


The fact is you want to save so you can give them something. You might have already taken action or you're planning to very soon. The thing is you've got the intent to save money for them on a regular basis.


So here’s a question for you…


If you've started saving already, as of today, have you saved the amount that you wanted to give them?


Are you even close to reaching that target?


If you haven't started saving yet the the answer is a firm no, right?


If you have been putting money away then the answer is probably not. If you couldn’t save anymore how far would what you’ve saved so far go towards the goal that you wanted to provide for?


International Life cover For expats

It isn't going to cover your kids expenses, otherwise you'd have stopped saving.


Again, life insurance is a way of making sure that this money is there for your kids. Irrespective of whether you're around to keep putting the money away for them.


You can cover the amount that you wanted to save for them. If anything happens to you that money is going to be available to do what you wanted it to do.


If it’s important enough for you to want to save towards, isn’t it important enough for you to insure for?


Guess what, making sure that this money is there for your children isn't going to cost the earth. It's only going to cost a fraction of what you'd have to invest in order to generate it in the first place.


Paying Off Debts

Mortgages, credit cards, car loans in fact any kind of debt for that matter doesn’t disappear if someone dies.


Lenders still expect to get paid even after you're gone. The responsibility for those payments falls on the people that you leave behind.


How long would your family be able to keep making debt repayments if your income stopped?


What would be the financial impact on their standard of living in this situation?


Would it add to your partner's already fragile emotional state?


This extra financial pressure would put a great deal of pressure on your family at a very difficult time. Having to think about where they're going to find the money to live and finance the debt.


Portable Life Cover For Expats

If you’ve got a mortgage you might be thinking that they could dispose of the property then pay off the debt.


Selling a property isn’t a quick process. Even when the market is good you’re looking at six months minimum to complete a sale. When things are slow then you could be looking at years before they can offload it.


In this situation the price that they get could also be much lower than expected.


If they can't finance the debt then the lender will charge extra interest and penalties. The longer that situation continues the risk of foreclosure increases.


Depending on the property ownership structure then probate may be an issue. So, if the property did fall into your estate and a grant of probate was required, they couldn't sell it until they got it.


Unfortunately, it can take many months even years to complete this process.


We’ve seen it take 18 months for estates to clear probate and these were straightforward cases. The deceased had a clear instructions in an up to date will and nothing was being contested by anyone.


And it still took this long!


All through this your family must find the money to keep paying the mortgage.


Haven’t they been through enough without having to deal with this as well?


Again a life Insurance policy means there’s money available almost immediately. Your family can use this to pay off these debts and reduce monthly outgoings.


Even if they decide to sell the property they can do it when it's right for them. Clearing that debt means that they have choices available to them.


And that means they have one big thing less to worry about and a bit of space to breath.


Life Insurance For Paying Estate or Inheritance Taxes

Depending on what you have, where you have it, where you come from will influence whether there's a tax issue. Where you currently live could also have an impact as well.


Your estate could be subject to tax in more than one place. There could be a charge in your country of residence and origin. There could also be tax levied in a country where a particular asset's located.


After deducting allowances, death duties range from 4 & 80% of the net value of your assets. Allowances get taken away and what's left is charged at the prevailing rate in that location.

Anyone originally from the UK is charged inheritance tax on their worldwide assets. This applies even if you no longer live there or haven’t for some time. As a British national it's very difficult to have your estate to escape this charge. If you own property there it's impossible.


Life Insurance For Expat Estate Planning

Even for non UK nationals, their estate will have to pay inheritance tax on UK property. The USA also charges estate taxes on non residents who own assets there.


“What’s the bog deal?” you might be thinking. “The estate sells some of the assets and then pays the taxes and there’s more than enough left over”


The thing that you really need to be aware of is generally these taxes need to be settled first. Only then can the assets be sold. An estate will remain frozen until the tax man gives approval. That only happens when those taxes get paid.


Once that's done the estate clears probate and assets are released to beneficiaries.


Some countries allow the use of cash holding to clear estate/inheritance taxes.


The question is do your dependents have the financial resources to pay any sizeable tax bill?


If they don’t then they’re going to have to borrow the money or leave the estate where it is. Even if they borrow the money it could still take years for the proceeds to be available. This means that interest charges will eat into what's available for them.


Once again it's life insurance to the rescue and if set up properly it's the ideal answer.


The proceeds of the policy will fall outside of your estate. This means that it will provide capital to clear any liability fast. Which means that those assets available for your beneficiaries.


The policy can be set up inline with the liability amount and reviewed on an ongoing basis if necessary.


A little side note:

If you own property in the UK, even if you’re not British and if it's held indirectly. It will still be subject to inheritance tax at the net value of the property. Only mortgages taken out at the time of purchase can be offset against any liability. Any subsequent loans or re-mortgages are not deductible in the IHT calculation. That means if you've refinanced your family will be left paying the tax on the full value of the property and the mortgage.


Providing Liquidity

Just because you’ve got wealth doesn’t mean that you’ve got liquidity.


We mentioned earlier how your loved ones may have to wait before they can access your estate. Depending on the ownership structure of assets then it could go through probate. One thing is certain clearing probate takes time.


Even if there's no probate, if the bulk of your assets are in property then this is an issue. Do properties need selling to release capital to cover expenses?


They’ve lost your income and they need to replace it. If there’s no alternative then surely that means selling assets. If those assets are in the form of property then this is also going to take time.

Life Insurance For Expat families

What do they live on in the meantime?


In this situation life insurance is an excellent solution. The proceeds from the policy will fall outside your estate if it's set up properly. This means no probate and the proceeds being available in days after a claims been made.


So, your family have the financial resources to get through this difficult period. If the estate needs to go through probate they're not going to struggle. And if it isn't required then it gives them time to decide how to use the assets in the best way, going forward.


Before we move on a summarise everything that we've talked about today...


Here's an opportunity to get a copy of our...


"Expat Life Insurance Confirmation Pack".


It's completely FREE and has resources to help you confirm your life cover still works. Plus it gives you a step buy step guide of how to do that and gives you questions that you should be asking.


So CLICK the image below and get your's NOW!

Life Insurance For expats

Summary

Financial planning should always start with protection and life cover is a big part of that. Your first priority should be protecting the ones you love from loss. And until you've done that you shouldn't be thinking about investment.


Your protection needs will change throughout life. Earlier it's about making sure that your family aren't burdened by debt and have resources.


As you get older and you've created wealth then it's about protecting it. Giving your family the resources to be able to utilise the wealth you've created. Making sure that any liabilities are met and giving them access as quickly as possible.


In all these situations it gives your loved ones the time that they need to adjust and make changes.


Life insurance works in all of these situations and it's the most cost effective way of doing it. Most of all though it gives them security at a time when they’ve experienced tremendous loss. And It means that they have the resources to secure their future.


Before we go here's one last opportunity for today to get a copy of our...


"Expat Life Insurance Confirmation Pack".


It's completely FREE and has resources to help you confirm your life cover still works. Plus it gives you a step buy step guide of how to do that and gives you questions that you should be asking.


So CLICK the image below and get your's NOW!


We'll send you our "Expat Life Insurance" email series along with tons of bonus material.


Thanks for reading, we'll be back next week

expat Life Insurance

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