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This blog explains how moving abroad impacts your Canadian life insurance policy. It covers whether your coverage remains valid, potential premium changes, updating beneficiaries, and currency issues. It also discusses the option of purchasing additional coverage abroad, tax implications, and the need to notify your insurance agent. Real-life examples illustrate how ex-pats manage these changes to ensure their financial security remains intact despite international moves.
But the good news is that in most instances, the Life Insurance you have purchased in Canada will remain effective regardless of you moving abroad. Life Insurance Plans taken from a Canadian insurer are typically drafted to cover you anywhere you would be living if you continue to pay your premiums on time.
However, you must notify your Life Insurance provider or your agents of any change in your address. We always advise our clients at Canadian LIC to make such a notification. In case of lack of this notification, you will face the consequences at some future time, especially while processing claims or even changing policy details, for instance, contact information or currency preference.
For instance, let’s take the case of Karen, one of our long-standing clients who decided to relocate to the UK. Karen didn’t know what would happen to her Life Insurance policy. In seeking our help, we ensured Karen continued her policy without a break-only by continuing to pay her premiums on time. There were some minor changes in what she preferred to communicate through, which we accommodated fairly smoothly for her. After all, Karen’s story is not unique-she is just one of many individuals we help every year who relocate for work, for retirement, or for other family reasons.
One of the most common questions we get at Canadian LIC from clients moving overseas is whether their Life Insurance premiums will change. Well, the answer depends on a great number of factors. For most people, your premium amount will be the same. This is because Life Insurance Plans are usually based on the conditions set when you initially purchased the policy—your age, health status, and lifestyle at that time.
However, sometimes, your insurer would be required to review your risk factors depending on your new location. For instance, if you are moving to a country that is considered to be at a higher risk — maybe because of unstable politics, natural disasters, or lack of medical facilities, etc. — then your premiums might change. This is why staying in contact with your Life Insurance Agents is the need of the hour during such a period. They may help walk you through such transitions and let you know if you need to change your premiums.
For example, there was Mark, a client of ours in Canadian LIC. He had gone to a country which was in the clutches of mass political upheaval. He was quite disturbed whether his policy would be affected or not. After discussions with his Life Insurance agent, he came to know that the premiums would remain the same as long as he paid them in due time and did not indulge in some high-risk activities.
The next thing you have to check on is the beneficiaries of your life Coverage. When you are leaving, there might be a change in situations, and so would the relationship and dependency level. You would want to check whether your present set of beneficiaries makes sense in your new location. Besides, if your beneficiaries are elsewhere, you have to verify with your life agents how the money would be returned to international beneficiaries.
Let us give you an example. David and his wife had bought Life Insurance years ago. That was back in the day when they were living in Canada. They later moved to Australia for work. They had their first child, and at this point, their Life Insurance beneficiaries suddenly needed a re-evaluation. He approached us at Canadian LIC, where we had his policy updated to reflect his child as a beneficiary. Today, he can take care of his growing family even if they are miles apart all over the globe.
Another factor that will creep in when you decide to live abroad is currency. Your Life Insurance policy in Canada usually pays in Canadian dollars, but you may end up changing currency if you move to another country. This may deter the full payout that your beneficiaries will get upon maturity of your policy and the eventual payout. As such, it would be wise to talk to your agents about whether your policy is flexible about the currency for payout or if your beneficiary will have to exchange this accordingly.
We have one client, Lisa, who moved to Japan; she was concerned about this issue. With the support of Canadian LIC, we were able to explain to her how currency changes might affect the beneficiaries and introduced her to ways of planning financial protections. Not all insurers provide multi-currency payouts, so it’s essential to discuss information with your provider.
One question we are always asked by expats moving overseas is, should they purchase a new Life Insurance policy in their new country of residence? It really depends on a whole array of factors. While you may be able to continue carrying your Canadian Life Insurance policy, some clients would like to have additional coverage in their new country of residence, depending upon the uncertainty of their long-term plans.
A new policy might also prove more advantageous if you’ll be abroad for a long time or forever. It can be of use when managing local taxes, regulations, or even changes in lifestyle not initially anticipated under the old policy.
Let’s take the example of Priya, one of our clients who moved to Germany for employment. Priya already had an existing Life Insurance policy with Canadian LIC but felt apprehensive about some gaps which were being formed due to variations in local laws and taxes. Eventually, after consulting with us, she went ahead and kept her existing policy but took a smaller supplementary life policy in Germany, as well. With that, she was assured that no matter what, both fronts of her family’s financial situations were protected.
If you are moving abroad and will frequently be travelling internationally, then you’re probably wondering what impact that has on your Life Insurance. The good news is that most Life Insurance issued in Canada is global in scope, meaning you’re covered regardless of the territory. There are, however, specific high-risk countries whose frequent travel visits or stays may invalidate coverage in your Life Insurance policy.
For example, we have a client, Robert, at Canadian LIC, who operates in the oil business and travels frequently to areas of high political tension. His Life Insurance Agent closely collaborated with him so that his travel schedule did not compromise coverage. His policy was scrutinized, and exclusions were placed on certain areas of high risk. It always helps double-check travel plans with Life Insurance Agents and ensure your coverage is not voided.
Taxes are another area that can easily become complicated with Life Insurance policies when you move abroad. Generally speaking, Life Insurance proceeds are not taxable in Canada, but the tax treatment of those proceeds may change if either you or your beneficiaries cease being Canadian residents. So, make sure to discuss the tax implications of your Life Insurance Plans with both a Life Insurance agent and a tax professional familiar with cross-border taxation.
As a matter of fact, Canadian LIC will regularly coach the client on how to understand taxes in their new country and how that affects Life Insurance. In particular, Greg, who is one of our expats working in Singapore, asked us whether the payout from his Life Insurance would be taxed. We presented him to a tax consultant, and after careful analysis, we could tell him that his Life Insurance policy in Canada would remain fully on to provide the policy benefits he was saving for his family without undue taxes.
Moving abroad can be very exciting and has its changes and challenges, but your Life Insurance policy should not be the thing keeping you awake at night. At Canadian LIC, we help clients every day to ensure their Life Insurance Plans remain effective and serve their loved ones, no matter where they choose to live. You could work closely with Life Insurance Agents to review your coverage and make any necessary adjustments.
If you’re moving or have already moved, remember also to contact the premier insurance brokerage, Canadian LIC. We are with you each and every step of the way to make sure your Life Insurance stays robust and strong.
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Get Quote NowThese FAQs cover key points that many clients face when moving abroad with their Life Insurance Plans. Whether you’re relocating for work or settling in a new country, keeping an open dialogue with Life Insurance Agents can make the process much smoother.
These sources provide reliable information and further details on Life Insurance in Canada, especially for individuals moving abroad.
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