How to Transfer Term Insurance Policies When Relocating Abroad

Moving out of your home, whether for education, a job, or any other reason, is a difficult task. However, it becomes tenfold more difficult if the move occurs across nations. And to throw your term insurance policy into a mix sure looks like a scary task. If you are also someone making a move abroad and unsure what to do about your term insurance policy, read on and find out.

Reasons for Transferring Your Policy

Suppose you are moving from one country to another for a significant period, like to get an education or a job. In that case, transferring your term insurance policy to the new country is also advisable. Here is how transferring the policy will help you:

Maintaining Coverage

While most term insurance policies have international cover, they are better suited for a short international trip or vacation. They also work well for people who travel a lot for work throughout the year. However, they might not be a practical fit for people moving abroad more permanently. It is because, due to their permanent shift, which also makes them an NRI in the future, they can have complications relating to maintaining coverage.

Avoiding Gaps in Protection

Another solid reason to transfer your term insurance policy as you move abroad is to avoid any gaps in protection. While most term insurance policies are standard across the globe, they might have certain significant differences due to varying laws of the land. Therefore, it is best to have a policy in the country where you live permanently.

Cost Considerations

Buying and maintaining a term insurance policy in a country different from the one you live in can quickly result in piling costs due to international taxes and surcharges. The best way to avoid such charges is by marinating a term insurance policy in the country you reside in.

The Concept of Policy Transfer

If you have decided not to continue your existing term insurance policy while you relocate to a new country, here is what you can do:

Moving The Policy's Jurisdiction

You can check it with your insurance company, and if they have operations in the new country you are moving to, you can request them to move your policy's jurisdiction. By doing this, you can maintain your original cover while ensuring that your policy is fully functional without any extra tariffs where you now reside.

Converting It

Another option that you have is to convert your policy. It is done if there is no equivalent of your current term insurance policy in the country you are moving to. So, as you can now transfer your policy, you can convert it into a local variant that offers similar benefits while adhering to regional rules.

Canceling And Reinvesting

While this must be the last resort, if nothing else works, you can cancel your current policy and get a new one in your new country. However, before you do this, you should talk to your insurance agent and create a road map for how to do it.

Challenges and Considerations

When relocating abroad, transferring your term insurance policy is a great way to ensure you stay fully protected by insurance without much hassle. However, despite its many benefits, there are a few downsides as well that you must consider while transferring your policy:

Policy Restrictions

The first challenge that you might face is policy restrictions. While most policies these days have the option to be transferred, there still are policies that do not support such transfer. To ensure your policy has no restrictions, read the terms and conditions and contact your insurance company for further clarification.

Premium Adjustments

Premium adjustments are another major issue when transferring insurance policies from one country to another. Premiums for policies vary depending upon the coverage and the location as well. The difference in premiums in the country can pose an issue. However, this can be mutually resolved by having a detailed conversation with the insurance company and coming up with a plan to adjust the difference.

Tax Implications

Tax implications are a major challenge in transferring policies from one country to another, especially if the federal relations between the two countries are not very good. Therefore, before making any decision, understand how the transfer might affect taxation on premiums or benefits in both your home country and your new country.

Steps to Transfer a Term Insurance Policy

Once you have made your decision to transfer your term insurance policy when relocating abroad, here are the steps that you will need to follow to ensure a smooth transfer:

Review Policy Terms

You first need to review your policy terms to see if it allows for relocation. Your policy terms will be mentioned in the policy document the company must have given you during purchase. You may also find an e-copy of the documents at your registered email address.

Contact Your Insurer

Once you are sure that your policy terms allow you to relocate, the next thing to do is contact your insurer. Your insurer will check your request and provide the procedure you must follow. It generally includes filling out relevant forms, providing required documents, and paying for premium gaps.

Fill out the Relevant Forms

Once you have received the information about relevant forms to fill out, fill out those forms with accurate information. Ensure not to skip crucial details or provide any inaccurate facts, which might result in subsequent policy rejection.

Provide The Documents

The policy transfer from one country to another requires documents like your original policy, proof of identification, proof of you moving abroad, the legitimate reason for such move, etc. Based on your insurance company's requirements, provide all the documents promptly.

Make The Premium Adjustments

Once you have fulfilled all the formalities and filled out all the forms, it is time to make premium adjustments, if any. It means if the premium applicable in your current country differs from what is required in the country you are moving into, you make adjustment payments to even it out.

Frequently Asked Questions

Will transferring your term insurance policy when you move abroad require you to Take The Medical Examination?

Generally, additional medical tests are not required for transferring a term insurance policy from one country to another. If the insurance company explicitly asks for one, it is advisable to get the test done and submit the report to the insurance company.

If the terms do not explicitly allow you to transfer your policy abroad, can you still transfer it?

If the terms do not explicitly allow you to transfer your policy abroad, you should contact your insurance company to see if you can transfer it.

Will the additional riders or benefits remain intact after the policy transfer?

Generally, the core coverage and attached riders or benefits get transferred along with the term insurance policy. However, this can vary depending on your insurer's policies and local regulations in your new country. Therefore, it is crucial to confirm this with your insurance company.