Insurance for digital nomads: What’s needed?

Several countries offer attractive packages for digital nomads who want to see the world while working remotely.

However, as with those who work from a permanent base, health and possessions insurance is needed. We provide an overview of what remote workers need to protect themselves while abroad. 

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Why be a digital nomad?

Digital nomads are able to work remotely from anywhere in the world that has reliable Wi-Fi. This can be an exciting way to see other countries; and save money, by earning an income in a strong economy (such as the United States) while living (and spending) in a low-cost destination (such as Thailand). This is known as “geoarbitrage”. 

Financial complications

The Covid-19 pandemic has shown us that it’s possible to hold down a white-collar job almost anywhere in the world, given the right equipment and technology.

Working remotely in Bali or Bangkok may sound like bliss, but there are drawbacks, says Hannes van den Berg, CEO of Momentum Consult.

“It can easily complicate your financial obligations,” he warns. He recommends working with a financial planner to map out a strategy best suited to your individual needs and goals.

Digital nomad insurance

Digital nomad insurance is global travel and medical insurance covering people from all over the world outside their home country.

It’s typically provided by international companies to cover such items as day-to-day healthcare, luggage and gadgets, cancellations, and emergencies. When you purchase an airline ticket, there is typically some embedded insurance cover.

“Ensure that your travel insurance covers the entire duration of your trip, protecting you from unexpected events and providing peace of mind throughout your travels,” recommends Lynette Machiri, customer experience team leader at Flight Centre Travel Group South Africa.

At a minimum, a global nomad needs the following:

• Travel-based insurance. This covers equipment and gadgets, such as laptops, cameras, bank cards, and passports. It also covers missed flights or flight cancellations.
• Health-related insurance. This should include general illnesses requiring medical consultation, injuries, emergency evacuation, dental care, pregnancy care, and the repatriation of your body in the event of your death.
• Dread disease or critical illness cover. This protects you or your family if you’re diagnosed with a critical illness and meet the required severity criteria.
• Life cover. This pays out a lump sum to your family to ensure they’re financially secure and stable. Premiums are paid during your lifetime, and the insurer will pay the cover amount to a nominated beneficiary or beneficiaries if you pass on, provided you haven’t let your payments lapse.
• Disability cover. This protects your biggest asset – your ability to earn an income. It offers financial protection if you suffer a permanent illness or injury and can no longer work. It should also cover the extra costs of living with a disability.

The complications of health insurance

Van den Berg says there is a difference between travel insurance and international health insurance. 

The first covers people abroad, or outside their service area, for short periods of time. The latter is a more comprehensive, long-term health solution. It’s wise to find out what your medical aid offers, and the duration of cover, while you’re out of the country. 

“Think long and hard before you cancel your South African medical aid,” is the advice of a spokesperson at Fedhealth, a subsidiary of Sanlam Health Solutions.

If you pause your cover for more than 90 days, your medical scheme can apply some underwriting to your new cover, such as a three-month general waiting period, or a 12-month waiting period on pre-existing conditions.

This means you may not be able to claim for the period or conditions stipulated by the underwriting. However, you’ll still be liable for your full contribution until the conditions are lifted – and nobody wants to pay for something they can’t use immediately.

Can you take a payment holiday on investment products if you travel?

Some products have contractual premiums, meaning you must keep up the payments; failing which, your cover will lapse. 

“When there is no contract, you can take a payment holiday - for instance, with unit trusts,” says Van den Berg.

Your pension fund, however, may be affected. “Find out if you can continue contributing to your current fund in your primary country, or if you need to contribute to an international fund,” he recommends.

Another critical point is to ensure you keep up your insurance payments on any property you retain in South Africa.

Tip: A personal loan may tide you over in a medical emergency.