If you are a U.S. citizen but spend much of the year traveling, here are a few things you must know about life insurance coverage. You’d be surprised how much you can do in advance to make sure death benefits go where you intend, and in the amount you intend.
Does My Life Insurance Policy Cover Me While Travelling?
First, look at your policy. Whether you have life insurance coverage while abroad depends upon when you took the policy out, where you are traveling, and what you do when you get there.
First, if you die within the first two years after taking the policy out, that will be within what is called the contestability period – the insurer can and likely will deny your beneficiary’s claim based on insufficient death records or any omission or mistake on your life insurance application.
Next, as you might imagine, a week’s business trip to Paris is treated differently than three months scuba diving the Great Barrier Reef.
The bottom line is, if you die while abroad, whether your life insurance application was accurate, what country you were in, and what you were doing while there will be factors the insurer takes into consideration when determining whether to pay your beneficiaries’ claims.
Do you plan to travel to a Dangerous or Underdeveloped Country?
After the applicability of the contestability period, the next thing insurer companies look at is where you were living at the time of death. Insurers place destinations in one of these three categories:
- acceptable (but with limited coverage depending upon the time there); and
In categorizing a destination insurance companies analyze the stability of its government, its travel services, and its general industry data, as well as its public health and sanitation standards and the quality of medical facilities found there.
Countries with a stable government and economy, with no current natural disasters, will be the lowest risk and deemed acceptable for travel. But countries suffering from either war, famine, or flood will be deemed unacceptable for travel.
We advise that you call your insurance agent to find out how your destinations are categorized.
How Long Will You Be Travelling Abroad?
A short trip abroad of a few days or a few weeks will likely have no effect on your insurance coverage. But if you plan to be traveling abroad for longer than six months, take note: your insurance company can consider you a “non-resident” and put a hold on your life insurance coverage until you return.
If your plan is to maintain residences in the U.S. and some other country, your insurer will look into the risk factors discussed prior as applies to your second country and determine coverage accordingly. Of course, your life insurance company cannot prevent you from moving to a higher-risk country, but it could increase your premiums or cancel coverage altogether.
Are You Planning to Engage in Any Activities That Your Insurer Considers High-Risk?
Last, the insurance company will look at the activities you engage in while traveling. Obviously, visiting the Louvre is less risk than skiing the Alps. You should let your insurer know what you plan to do while abroad so that there is no chance they can deny coverage for failure to disclose high-risk activities.
How Your Beneficiary Can Make a Foreign Death Claim
If you die traveling abroad, your beneficiary makes what is called a “foreign death claim.” Two common problems:
1. The Contestability Period Applies
The “contestability period” is 2 years from the date the policy went into effect. During that period, your insurer can investigate the accuracy of the information you submitted on your life insurance application. If they find any errors, even if those errors are unrelated to the cause of death, the insurer can and will deny your beneficiaries’ claims. Even a small mistake or misstatement, such as stating that you weigh 180 when you weigh 195, can result in claims being delayed or denied. An experienced national life insurance lawyer can help your beneficiary challenge and overcome denial of their claim under these circumstances.
2. The Insurance Company Will Insist on Foreign Proof of Death
Proof of death is always required by insurance companies in order to pay a claim. Such proof can be difficult to obtain when the insured dies in a foreign country. Even when such proof is obtained, it is often not in a form deemed acceptable by insurers.
Insurance companies frequently launch an investigation when being presented with foreign proof of death, like;y because they have had to pay out in the past due to people faking their own deaths. In the case of foreign death, beneficiaries are well-advised to seek the help of an experienced life insurance attorney to get paid.
About the Author
Veronica Baxter is a writer, blogger, and legal assistant operating out of the greater Philadelphia area. She works frequently for busy Philadelphia life insurance attorney Chad G. Boonswang, Esq.