Imagine this. You’ve already booked your plane tickets to the modern birthplace of pizza, Naples, Italy. Your itinerary is screaming at you by looking at it: Florence, The Colosseum in Rome, San Marco Square in Venice. The Airbnb booking is made. And luckily, you’ll be right in time to attend the Battle of the Oranges festival in Ivrea. But before your Uber arrives to drive you to the airport, your better half brings up the issue of life insurance. While traveling for a vacation doesn’t sound critical to life insurance, insurance companies have a different opinion. Your insurance plan may not cover you during the trip.Traveling can affect your life insurance plan.Depending on insurer this is what you need to know about travel and Life Insurance Coverage.
- Destination (Country) Ratings
Many insurance companies rate countries on a scale. Under this scale, they check factors such as economic conditions, availability of medical resources, and political stability. These ratings can fall in a cluster such as 1, 2, 3, 4, with “1” being a lower risk and “4” being the highest, which is a method used mainly in North America. According to Canada’s leading insurance marketplace, country ratings vary with each insurance company. For instance, countries such as Germany, Italy, France, and the United Kingdom are number “1” rated.
On the other hand, countries such as Liberia, Afghanistan, Iran, Iraq, and many more are no. “4” rated. Most insurers will openly deny coverage if you plan to visit a no. “4” rated country. However, these ratings change from time to time based on different factors. The bottom line: check with your insurer for country ratings. Additionally, check whether you will be covered when you travel to that country.
- You’re Termed a Risky Candidate
A life insurance underwriter will assess your application to check anything that makes you a risky candidate. This can range from a severe medical condition, family history of a health condition, or a risky job, such as being a helmsman. During the underwriting process, most insurance companies look for two things: health and safety concerns. For instance, a politically unstable country that lacks accessible health institutions increases the likelihood of endangerment if you travel there. Additionally, a country with a high mortality rate will be viewed with more scrutiny during underwriting.
- You May Be Considered as a Non-resident
Foreign travel is not without drawbacks when it comes to life insurance. Of course, insurance companies understand that people travel regularly: They want to know what part of the year you spend outside of the U.S. As mentioned above, traveling in a no. “1” rated countries won’t be viewed as high risk. The scenario quickly changes should you decide to spend several months of the year abroad or you’re an expat. Under such conditions, an insurer will quickly label you as a non-resident.
- Your Coverage is Lowered
Insurance companies group each country by level and consider travel based on country code. As mentioned above, countries with reduced risks are classified as the best class: A country with potential risks can get a standard plus rating. If you’re traveling to a dangerous location, you can be denied coverage altogether. This type of travel is where you’ll see many issues when purchasing a life insurance policy. If you travel to a country labeled as no. “4”can limit your insurance coverage. And if you’re buying a shorter term policy before a trip – say four years – an insurer can view this negatively. Remember, the more risky the insurance company views your travel plans, the more they will limit your life insurance policy.
- Your Beneficiaries May Not Be Paid if You Lied During the Application
Ensure you are as truthful as you can be during the application process. If not, your life insurance company will deny your listed beneficiaries the death benefit if you die overseas. Suppose you notified your insurer about traveling to a “high risk” country and were still given a life insurance application. In that case, the life insurance company cannot later contest the death benefit. After all, you made it clear you were traveling to a potentially risky country. Similarly, if you pass on in a country that was not listed as a risky country but was later added, your beneficiaries will still receive death benefits. The bottom line: be honest when filling the life insurance application.
Traveling can affect your life insurance plan. However, you can take the proper steps to ensure your dependents are covered should you die unexpectedly overseas. Ensure you are honest when filling your life insurance application. This clears the air with your insurer, especially if you’re traveling to a risky country. Keep these tips in mind the next time you decide to visit a foreign country.
