The first financial advice on offer for those working in a foreign country, hammers on the points of reviewing your savings or diversifying your invest portfolio. While both are plausible and is founded on sound advice, there is not much mention about diversifying risk cover.
At the point of boarding a plane, most people do not know if their current life or disability policy offers them worldwide protection. Sometimes there are so many variables to consider that there is no clear-cut answer to whether you are covered or not. This can become a sensitive issue if something were to happen to you while travelling in a foreign country.
Diversifying your cover when working abroad
Given the current climate in the wake of the pandemic, global risk cover can offer you peace of mind. However, scepticism leads one down a path of never-ending questions when selecting the right plan for you and your family. Here are some points to consider when reworking your life policies with a global perspective.
1. Exchange rate certainty
Life can be unpredictable. The realities of the world do not stop from happening once you leave your country. In fact, given that the exchange rate often holds South Africans at a disadvantage, you are more at risk outside of your home country. To avoid this potential pothole, obtain clarity about the effect change rates could have on your monthly premiums or your benefit pay-outs in the event of an incident. If possible, get a plan that will offer protection against fluctuations in the exchange rate.
2. Annual billing
Paying a year’s premiums up front can massively free up your finances and help you with your annual planning and/or budgeting, especially if you are relocating elsewhere. If misfortune strikes while you are abroad, or your finances get tied up in overseas dealings, you will have the comfort of knowing that your cover has been paid in advance.
3. Global education
If you are travelling with your family, you are probably aware of the costs of schooling. Most life cover options provide for an education support package at an additional cost. With the option of global risk cover, it only stands to reason that there will be global education cover as well. Accommodating for education in a foreign currency can overcome an unnecessary burden for your loved ones.
4. Cover before leaving
For the sake of convenience and fluidity, hunt around for a global risk cover provider that offers protection while you are still resident in SA. This will save you loads of time during the planning and relocation process. It also offers you some reassurance that your cover is active prior to moving out of the country.
5. Estate costs
Because of excessive taxation on estates, you need to ask your advisor about the finer details around your policies in the event of death. Contrary to local life cover, there are global risk plans that will pay out to beneficiaries residing offshore, which means that it will not be deemed as an asset in the deceased’s estate and is therefore not subject to taxation in South Africa.
6. Business assurance
If you are an entrepreneur and hope to expand your footprint globally, then it is imperative to look for a type of cover that can be owned by offshore trusts and companies, which will compliment business assurance structures. In the instance of key-person insurance, the premiums can then be attributed towards business expenses, and, in the event of death or injury, be made payable to the company in its designated currency.
The terms and types of cover mentioned here might vary depending on the financial institution you choose and the different packages they offer.
Whether you are an expatriate hoping to make your shift more permanent, or you are exploring your options, it is now a good time to investigate and prepare for global risk protection. An advisor who is well-versed in the intricacies brought on by international exposure, can assist with an offshore risk assessment and provide suitable protection based on your needs.