Do you travel abroad? Do you know that international travel affects your life insurance? In fact, if you spend too much time abroad you might not qualify for the best possible class and even have your application declined. We felt it is important to outline how exactly life insurance companies view foreign travel and what they are looking for.
Here is what we would cover. Please feel free to click on the topic that it’s most important to you.
- Questions companies will ask you.
- How to get the best rate.
- FAQs about foreign travel and life insurance.
If you would like us to take a closer look at your personal situation, please reach out to us. We would take the time to understand your needs and provide you with a personalized solution.
Questions companies will ask you.
There are over 60 things that companies are looking for when underwriting your application
First, just about every carrier will ask about foreign travel. It is a part of the application questions.
We want to give you some “behind the scene information”. Once you submit the information, carriers start working on the policy. Some of the questions they ask are self-explanatory, however, we wanted to give the reasoning behind each question and how exactly it affects your life insurance application. The information that they will need to know is:
Where have you been or planning to travel?
This is one of the big ones. Companies rate countries into different categories based on the level of risk they pose. The countries would fall into A, B, C, or D category. “Category A” – here you would find the “safest” well-developed countries, such as countries in Western Europe, Australia, some countries in Asia and etc.
As you guessed, B, C, and D are viewed less favorably by the life insurance companies. And then, there are countries that are considered way too dangerous and are put on the US Travel Advisories Do Not Travel Risk.
This list changes on a regular basis. That’s why it is important to work with an advisor who specializes in life insurance for foreign affairs and will be able to guide you into finding the best option.
How long have you stayed or planning to stay?
This is another important piece of the puzzle on how international travel affects your life insurance. Companies acknowledge that the world is global and people travel abroad often. However, they want to know what part of the year you spend outside of the US. If you are taking a cruize or you are touring Europe for a week or so, they will typically not view it as high risk. However, if you spend months out of the year abroad or you are an ex-pat, they may consider you a non-resident for the purposes of insurance.
What is the intention of your trip?
The companies would also need to know if this trip is a vacation or work-related? Keep in mind that there are occupations that they will not consider as eligible risk, for example, you are traveling as a missionary.
And if the trip is for pleasure, are you leaving to take part in any hobbies that may be a bit more dangerous. For example, rock climbing, scuba diving, sky diving and etc.
What state is your primary residence?
This is important because due to legislation, some states are prohibiting foreign travel to affect your life insurance application.
…Prohibits the insurer from: (1) declining such coverage based on past or future lawful foreign travel by the insured; or (2) charging a premium for the coverage that is excessive and not based on a good faith actuarial analysis….
Some of these states are Colorado, Florida, Georgia, Washington, Maryland, and New York.
What is your status in the US?
This would be the last piece of the puzzle. Companies would want to know if you are a citizen or a permanent resident, here on a visa or undocumented. The different status combined with foreign travel may really affect your chances of getting approved for life insurance in the US.
How to get the best rate
Here is what to do to get the best rate for life insurance.
Be honest – this is the first thing and probably the most important one. Let your agent know. A good and experienced agent will be able to determine if international travel affects your life insurance application and submit to the RIGHT insurance company.
Picking the right carrier for you could be the difference between getting your application approved at the best rate or paying more and even get your application declined
Have your past history – please provide your past travels, length of stays, and location. Companies would try to establish a pattern and predict future exposure.
This brings us to the next point….
Advise of definite future travel plans – this simply means that if you reasonably believe that you would travel internationally in the next 12 to 24 months (based on the carrier questions), disclose it.
Let’s put it this way if you have purchased travel tickets and you don’t disclose it on the application, companies could use that as grounds to void the contract and not payout should you pass away. In other words, you could leave your family financially unprotected.
Think of it this way, it is better to postpone life application or even get a denial vs. to have a policy that could not payout. Also, not to mention that lying on an insurance application is considered fraud.
Work with an experienced advisor – this is key. Just because someone is licensed to sell insurance does not mean he or she is an expert for foreign travel.
FAQs about foreign travel and life insurance.
Here are some of the most common questions we get when discussing how international travel affects life insurance.
Will my policy payout if I die abroad?
The answer is yes, it will. You are covered regardless of where you pass away. Here is the key, you need to let the company know and be honest and upfront with past and future travel plans. We can’t stress enough how important it is to disclose all of the information on your application.
What to do if a loved one had passed away abroad?
You would need to obtain a death certificate and reach out to the life insurance company to file a claim. Every company would send a packet of forms that need to be completed in order for them to pay out the death benefit. Once, all of the documents have been received in good order, they would process a payment out to the beneficiary.
Here is the thing to consider, how long was the policy in force, and was the cause of death clearly determined. These 2 things are very important, as they may slow down the payment. Here’s why:
- If the insured passes away before the policy had been in an effect for more than 2 years, every company has the right to contest the claim. Simply put, they can go back and re-evaluate your application to see if there was information that was omitted. If there was, this could give them grounds to void the policy.
- If the cause of death was not clearly determined, companies may need to give it some additional time. They want to determine if there was any foul play involved. We’ve all heard stories of people committing crimes to collect on a life insurance policy. Without going too deep into it, companies follow the slayer rule: “A killer shouldn’t be able to profit from killing.”
What if the beneficiary lives abroad?
We’ve created an entire post outlining the specific if the beneficiary lives abroad.
Do I need to notify my existing company if I will travel abroad?
No, you don’t. If you disclosed all of the information they asked you for at the time of the application, you do not need to worry.
Will my policy be active if I move permanently abroad?
Yes, it will be. The coverage would still apply, even if you moved to live abroad or renounce your US citizenship. Again, the main key point is honesty at the time of the application. If you are planning to move to another country during the application process, you MUST disclose it.
Make sure you update the address of the policy and you don’t skip paying for the policy. Many clients prefer the convenience of automatic deductions to ensure that they don’t miss a payment.
There are many factors that come into play when companies are reviewing your life insurance. Foreign travel is one of these factors. Companies want to be able to asses if the travel abroad adds an additional risk they need to account for. The key takeaway is, to be honest, and upfront about travel history and future plans.
We hope you find this helpful. Thank you!