For expats in Vietnam , Cambodia, Thailand, Singapore, Malaysia, Myanmar, China, UAE, Spain and other expat destinations, expat health and life insurance can be one of the biggest concerns.
Saving money, and investing the surplus, alongside taking wealth protection seriously, are two of the keys of financial freedom I mention in my book .
What do you need to look out for?
Is it a good deal?
Simplicity beats complexity in planificación financiera. Insurance is dead money, so you need to get as much covered for as little as possible. Being over-insurances makes no sense.
Is the insurer regulated from a developed countries?
You need to get as much covered for as little as possible, by an insurer that is regulated from a developed country, where there are strict rules on how claims are paid out.
Automatic renewal
Linked to number 2, most insurers from developed countries will include automatic renewal in their insurance quotes. That means if you get cancer or have a heart attack in a few months, the insurer is legally obligated to reinsure you in years 2, 3 and onwards, often for the same or similar premium as before. Saving a few bucks for a local insurance deal that doesn’t include this makes no sense, and I have seen countless expats with pre-existing conditions who can’t get covered. It makes much more sense to have automatic renewal BEFORE you get pre-existing conditions
Does the insurance include pre-existing conditions?
If you have came overseas with pre-existing conditions, does your insurance cover these conditions?
How steep are the increases in premiums
As you age, premiums increase. Knowing approximately how much they increase by can give you piece of mind and help you financially plan.
Do you need the insurance in the first place?
If you are living in Japan or several expat destinations where there is good quality health cover, and you are paying into the system from your taxes, you may not need private insurance. Likewise, if you don’t have children and don’t plan to have kids in the future, you don’t need life insurance
How much coverage do you need?
Most expat health insurances will cover you up to $1M or $2M of coverage, which is enough for almost everybody’s needs. In terms of life insurance, how much you need will depend on how old your kids are, how many years you want to support them for, and if you have any debt. If your children are 5 years old and you want to support them for 20 years and you have no debts, then $500,000 of life insurance will probably be enough. If you have debts, and have a wife and children who both don’t work, $1M of coverage or more might be needed. Remember, you can only withdraw 4% of a lump sum every year if you don’t want to run out of money, so $1M of life coverage is only about $40,000 of `safe income` per year.
