If you are planning a trip abroad, know that your life insurance policy may still cover you while traveling – but it may not. Be advised to check prior to departing because policies differ, and for this reason, you cannot just assume that you are covered while on your trip. Your policy’s fine print may contain exemptions or a list of reasons why your insurance company will not pay your beneficiaries if something happens to you while out of the country.
How Do I Know if My Life Insurance Will Cover Me While Traveling?
It depends on your policy, how long you have had your policy, the country you are visiting, and what you plan to do while there. For example, a week-long business trip to Tokyo will be treated very differently than two months backpacking in the Andes Mountains. If you die while traveling, where you were, what you were doing, whether your life insurance application was accurate, and how long you were away are all factors your insurance company will use to determine whether to pay your beneficiaries.
Are You Visiting a Country That Your Insurer Considers Dangerous or Underdeveloped?
The first thing insurers consider is where you plan to visit. Life insurance companies categorize destinations as belonging in one of three categories:
- acceptable for travel;
- acceptable for travel (with limited coverage depending upon time spent there); and
- unacceptable for travel.
Insurers analyze a destination’s travel services, government, and general industry data in determining which category applies. Obviously countries with stable government and economy, with no current natural disasters, will be the lowest risk and acceptable for travel. War-torn countries or countries suffering from famine or flood will be unacceptable for travel. Insurers also consider a country’s public health and sanitation standards and quality of medical facilities.
Know that it is entirely possible that countries on the same continent belong in different categories. For example, Sudan may be deemed unacceptable while Rwanda may be deemed acceptable. You may want to call your insurance agent and discuss your travel destination with these categories in mind.
Are You Planning to Be Abroad for Several Months?
Insurers also consider the length of time you will be abroad. A short trip of a few days to a few weeks does not trigger any negative insurance coverage consequences. However, if you are abroad for more than six months you will likely be treated as a Non-Resident, putting a hold on your coverage until you return. It is vital that you open communications with your insurer prior to leaving on any such extended trip to avoid loss of coverage.
If you plan to move out of the country, or, if you want to maintain residences in two countries, your life insurance company will look into the risk factors discussed prior as applies to your second country and determine coverage accordingly. It is not that your insurer can prevent you from moving to a higher-risk country, but know that your premiums could increase or you could lose coverage entirely if you do.
Are You Planning to Engage in Any Activities That Your Insurer Considers High-Risk?
Finally, your insurer will consider what activities you plan to engage in during your travels. If you plan to travel to Toronto for the Toronto International Film Festival, that is less risky than traveling to the Philippines to go scuba diving. Be sure to consult with your insurer so there are no unwelcome surprises for your beneficiary should the worst happen while you are away.
I’m a Beneficiary – How Can I Make a Foreign Death Claim?
If an insured person dies while out of the country, this will result in a “foreign death claim.” These are problematic for two reasons:
Life Insurance Contestability Period
Most policies have a contestability period (in the U.S., 2 years from the date the policy went into effect) during which the insurer has expanded ability to investigate the accuracy of the information you gave on your application. Discrepancies, even if unrelated to the cause of death, give the insurer reason to deny your beneficiaries’ claim. Even a small discrepancy, such as stating that you are 5’ 6” tall when you are actually 5’5”, can result in claim denial.
An experienced life insurance lawyer can help your beneficiaries challenge and overcome denial of their claim under these circumstances.
Foreign Proof of Death
Another problem is that an insurer will always require proof of death. This is notoriously difficult to obtain when an insured dies abroad. In addition, as customs and technology differ all over the world it is unlikely that a death is recorded the same way in the destination country as it is in the insured’s home country.
It is common for insurance companies, having been given a death certificate or some other document proving death from a foreign country to launch an investigation because they have been victimized by people faking their deaths in the past. In this case, you will need an experienced life insurance attorney to help get you paid.