Critical illness and life cover – what happens if you move abroad?

Taking out insurance to protect your family and livelihood is a responsible decision. But what happens to this cover when you move abroad?

We investigate options for retaining critical illness and life cover when you move overseas. We also look at how you can claim from there, and whether you should cancel your policy or keep it as-is.   

Tip: While you’re still around, make sure your car is protected – get a car insurance quote.

You remain covered when you move abroad

According to Leza Wells, chief product actuary at FMI, a division of Bidvest Life, you can keep your cover in place if you move abroad.

She explains that this is on condition that you still have a South African bank account that your insurer can debit your premiums from and pay your claims into. 

“We recommend that you contact your insurer or talk to your financial adviser before you leave the country, to ensure that the country you’re moving to has an acceptable level of risk,” says Wells.

If you move to a country that is considered a high conflict zone, or you pursue a career in a high-risk profession abroad, your insurer may not consider your cover valid anymore.

“By reaching out to them, you can be sure that your cover will stay in place and you will avoid paying premiums towards a product you won’t be able to claim from,” she adds.

How do you claim from abroad?

According to Garry Hill, financial advisor at GIB Financial Services, if you need to claim from your life cover or critical illness cover, the benefits will only be payable in South Africa.

“Your life cover will pay out to your nominated beneficiaries or your local estate, and your critical illness cover will pay out to the policy owner, locally. Some insurers now offer dollar-denominated risk policies that can pay out offshore, but this is not applicable to all policies,” says Hill.

Mike Jankelowitz, certified financial advisor at Liberty Life, illustrates this by using an example of a South African couple who move to Australia for work.  

“This couple plans to return to South Africa and they still consider themselves South African tax residents. Their incomes are tight, as they have many relocation expenses. Nonetheless, they both have life policies with death, occupational disability, and critical illness cover. They keep their South African policies running and pay the premiums from their bank account in South Africa,” says Jankelowitz.

“While they are abroad, one of them is diagnosed with stage three cancer. They complete a claim form and collate all the required test reports and submit to their provider,” he explains.

Jankelowitz says that once the claim is verified and approved, the benefit is paid out into their South African bank account and they arrange for the funds to be transferred abroad.

READ MORE: What happens to your debt when you move abroad?

Don’t cancel your cover on impulse

According to Ruvan Grobler, wealth manager at Bovest, many people make the mistake of cancelling their cover, and then they run into complications when re-applying later on.

“Cancelling your risk cover means you will have to go through medical and financial underwriting again and, if your situation and health have changed, you may not enjoy the same cover as before. Even though your work situation changes, your risks don’t,” says Grobler.

He adds that most insurers only require you to let them know that you will be working abroad, and where you will be going. He recommends keeping your policy in place until it’s completely redundant.

Does it make sense to be covered in rands?

Hill says that, simplistically, it wouldn’t make sense to be covered in rands. It’s better, he says, to take out cover in your new country of residence and to be insured in the local currency.

However, he believes that there are other factors that need to be considered.

“If someone has an interest in remaining insured locally, then it will make sense for them to be covered in rands – regardless of the new country having a stronger currency,” says Hill.  

“If they’re older and they have experienced any health issues post-taking out their local cover, applying for new cover abroad may be very costly, or they may not be granted cover at all,” he explains.

“In this case, keeping a local policy that’s already in place may be the best or only option,” says Hill.

He points out that the most important thing to do is to look at your specific circumstances, and to seek advice in regards to your existing insurance cover. Once all of the factors have been considered, an informed decision can be made.

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