Quick note: this article was last updated on September 24. This article will be updated if there are relevant changes in the future.
Many expats in the UAE, Singapore, Hong Kong and beyond buy life and other kinds of insurance.
Whilst this can make sense, given that you are outside your country’s social security system, are all product offering equal value?
In this article I will be reviewing some of the most widely sold plans in the market, answering some frequently asked questions (FAQs) and suggesting some alternative options available to expats and locals who want international standard coverage.
For people with existing plans, I also suggest what you can do, if you are unhappy.
This article is long. For the time poor and those that want to contact me directly, please email me (firstname.lastname@example.org or adamfayed@int-amg).
Sometimes I can offer discounts on the online prices you see quoted, depending on the circumstances.
Where are these plans sold?
These plans used to be sold globally. In 2013–2015, however, Zurich and Friends Provident exited many markets.
These days, therefore, they tend to only be sold in 2–4 expats hubs, but there are many people with older plans.
Rl360 LifePlans are sold globally in over 100 countries.
What’s the difference between term insurance and whole of life insurance?
Before reviewing these plans, it is important for us to make a distinction between the two main types of insurance.
Term insurance is pure insurance. It isn’t connected to an investment. If you get 20 year term insurance, and you don’t die during this period, you won’t get anything back.
With whole of life insurance, it is connected to an investment. So even if you don’t die, you might make “a profit” from the insurance.
On first glance, whole of life seems the better deal. In general, however, term insurance is the better deal and getting investments separately.
This is because with term insurance, you are paying for the costs of the investment and insurance.
This typically means you get much less coverage on the insurance side, and sub-par investment returns, as the costs of the investment are high.
Zurich Futura Review
Zurich International is one of the biggest insurance firms in the world, and has offices in Qatar, the UAE and beyond.
It is no surprise then, that their insurance products are widely sold. Size doesn’t always equal better policies, however, and this is certainly the case with this policy.
It is more expensive than some of the other plans reviewed below, due to its whole of life nature.
So how do the plans work? In addition to the life coverage, one of the positives of the plans is that you can add many waivers.
Those include critical illness, family income, hospitalization, permanent disability and a few other options.
You also have flexibility in terms of which currency to pay the plans in, how often (say monthly or yearly) and you can adjust the premiums if your circumstances change.
You can also add or remove benefits and encash your policies if you no longer require it.
So what are the negatives? The main negatives are:
- It is expensive as you are getting the cost of the insurance and investment.
- The actual investments inside the Futura can be very expensive.
- If you encash in the early years of the plan, even the first 7–10 years, you might not get much back. Considering you are getting less insurance in this plan, compared to cheaper term insurance, this is a tough pill to shallow.
- If the investment returns are lower than those you expect and have been ‘promised’, you may need to increase your premium to keep the same insurance benefits.
- If you make withdrawals, your policy can lapse.
- There are no index tracker options within the Futura, so many of the mirror funds used are expensive.
- There is a loyalty bonus after 10 years, but there are many terms and conditions associated with this being paid.
- The charges are very high. Just to give you one example, all single premiums are charged at more than15% a year!
- The old school processes makes doing anything difficult, including withdrawals and change of address.
Zurich International Term Insurance Review
Compared to the Futura, the Zurich International Term Insurance is cheaper and an overall better product.
As this is term insurance, you won’t get anything back, however, if you don’t die during the term.
The key features of the plan are:
- Terms of between 5 and 35 years.
- You can maintain protection worldwide. So even if you move, you can still maintain coverage.
- Like on the Futura, you can add optional benefits like permanent and total disability.
The positives of this plan are:
- The costs are much lower than the Futura. Not the lowest in the market, but much better.
The negatives are:
- Zurich’s customer service isn’t always the best. You are merely a number to them. I have seen processes like withdrawals take months to complete due to something incredibly small — like your signature isn’t a 100% match with the original or you have moved address so need to complete a new form.
- Zurich won’t pay claims if you haven’t been honest on the application form. That sounds reasonable. However, in addition to that, you can’t claim if you haven’t paid all the premiums due. There are also additional restrictions like terrorism.
- Even if you wanted this plan, new policies aren’t sold in many countries anymore. You can only buy this policy in a few countries.
- It is still more expensive than some of the other plans in the market.
Rl360 LifePlan Review
RL360 is an insurance and investment company based in the Isle of Man. Their LifePlan product is more akin to the Futura, in that it is a whole of life insurance which is linked to investment units.
The main features of this product are:
- $200 a month minimum premium. You can pay in 4 currencies.
- You can get covered up to $7.5M.
- You can add waivers like critical illness. This benefit is capped at $750,000 per year.
- You can also add total disability and other waivers.
- You can also add business coverage (like key man insurance which protects your business if a key person in your business dies) and family protection.
The positives of this plan are:
- It does offer a good range of benefits, combining business, family and personal needs. This would be great if these benefits were good value, but this isn’t the case with this policy. It might seem convenient to pay for business, personal and family coverage in one policy, but most of the people who buy this plan are eventually unsatisified.
The negatives are:
- It is expensive. Almost as expensive as the Futura. Fund costs are usually 2%+ per year. There then are additional costs that can total another 2%-5% per year. Much cheaper options are available in the market.
- You are dependent on the investment and insurance elements of the plan. This means you might have to pay more for the insurance, if your fees eat into investment performance.
- It is too complex with too many restrictions.
Friends Provident International Protector Review
Friends Provident has offices in the Isle of Man, Hong Kong and Singapore and has decades of experience in the international expat investing and insurance scene.
The term insurance they offer is pretty solid. The options offered are:
- Term life insurance.
- Term life insurance + critical illness coverage.
- Critical illness cover as a stand alone product.
Like most life plans, there are maximum ages for buying this insurance. That is, 65 for life cover, 55 for life total and total disability and 60 for critical illness.
The main positives of this plan are:
- Much cheaper than most products in the market.
- Benefits can be tailored to your needs. For example, you can choice level or decreasing term insurance. You can also pay in numerous currencies.
- With level life insurance, if you die during the term, your family gets the same benefit level. With decreasing life coverage, that benefit gradually falls over the years. Decreasing life insurance is often used in conjunction with paying off a specific debt — for example a mortgage.
- It is probably the cheapest of the 4 insurers I have reviewed here.
- No additional and hidden charges (in most cases). For example, no credit card charges.
The main negatives are:
- You can’t buy this policy in most countries these days. It is only available in a few countries, unlike before 2014.
- Certain restrictions do apply such as if you die playing extreme sports, terrorism and war.
- Even though it is cheaper than the other plans reviewed here, for many people there are cheaper or better options, depending on your circumstances.
- Just like all of the other providers, bigger insurance providers and banks, live off their brand names. A lot of boutique insurers are just as safe, and can’t rely on their brand names, so need to offer better benefits.
What about if you already have any of these four plans?
If you already have these plans there are 3 options:
- Keep paying in until the end.
- Stop paying and withdraw the money from the policy (in the case of the whole of life insurance). With term insurance stopping payments means you have no surrender benefits.
- Stop paying in but maintaining the money in the investments. In other words, you leave the investment component alone.
In general, if you are paying for term insurance already, it doesn’t make sense to switch to another provider, unless it is cheaper.
With whole of life insurance, it usually makes sense to withdraw money or stop payments, if you then buy cheaper term insurance.
For example, if you are paying $700 a month now with whole of life coverage, you might be able to get term coverage for $200 a month and invest the $500 into a low-cost investment.
The big mistake most people make is engaging in “loss aversion”. It is human nature to find losses at least twice as painful, as gains are pleasurable.
In other words, accepting a loss is painful, even if you can make up for the loss in just a few years.
So many people think “i don’t want to accept a loss considering I have already paid in 50k or 100k and can only get 20k back”.
Rationally and in terms of the maths, taking a hit can make sense medium to long-term.
Why do people buy the more expensive whole of life policies?
One of the main reasons is that people believe there is a “free lunch” where they can be insured, and get the benefits of an investment account. In reality, you pay for these things.
With term insurance, moreover, many people are worried about losing money if nothing happens.
However, insurance is merely a protection against statistically-speaking unlikely events.
Do expats need life, income and/or disability insurance?
Whether you need these insurances depends on many things. In particular it depends on:
- How liquid your assets are. If you are dependent on illiquid assets that are hard to sell or take months/years to sell (houses and businesses), you should consider term insurance.
- If you have kids, or plan to have them, or dependents, you should consider term insurance.
- If your income is not protected, you should consider term insurance, especially if your family is dependent on your income.
In other words, if you are a government employee, that has been sent overseas, with full income protection, your situation is very different to a self-employed person with a volatile income.
Likewise, if you are married to somebody with a similar income to yourself, you are more protected, in many ways, than if the family has just one income to rely on.
What are the main negatives all 4 options have in common?
Two of these plans are much more expensive than the other two. All have the following negatives in common, however:
- They are all “old school”. Physically application forms are often needed. It can take a month, yes a month, to have cover in place. In comparison, some other options can have coverage in place within 24–72 hours. Some of these providers are investing in technology, and trying to improve speeds, but they are still not quick.
- Even after the coverage is set up, you often need to send forms by DHL, for small changes to the policy.
- They are all relying, to varying degrees, on brand name. Newer or lessor known firms need to lead on product benefits and ease of processes to a greater degree.
- For income protection, there can be many restrictions about who can apply.
What are the risks with life insurance?
The main risks with life cover is that:
- Inflation erodes your payouts.
- Currency falls affect your payouts. For example, you have gotten your coverage out in GBP, but the Pound has fallen recently.
- The coverage will stop as soon as you stop your payments.
- The investment performs badly (this is only a risk with the whole of life coverage).
- The insurance firm goes out of business. This is a relatively small risk, though, and checks and balances exist for investment-linked life insurance such as limited government guarantees.
- The amount of insurance you need will increase with age, but you can’t increase the limit, for numerous reasons, such as your age or general health.
- Premiums will rise as you age. Some of the providers, like Friends Provident, guarantee the premiums for 5 years, depending on the cover you pick.
- You don’t get covered in the first place as a medical exam is expected or for another reason.
How are pre-existing conditions usually defined?
It differs depending on the insurer. Some insurers define it as a condition in which you have received treatment for in the last 5 years, and others define it in a more liberal or strict manner.
How can you have than one beneficiary?
Most life insurers allow you to pick multiple beneficiaries.
What if the predicted cost of coverage increases?
Whilst some insurers such as Friends Provident offers the 5 year guarantees, that doesn’t prevent insurance policies rising in all situations.
If this happens to you, you typically have 2 options; increase your premiums to retain the same benefits or lower your benefits and continue to pay the same premium.
How about the banks and local insurance firms?
In general, the expat banks charge a lot for life insurance. When it comes to local coverage, it depends on where you live and your circumstances.
In most situations, it makes sense to get expat coverage. Local coverage can make sense if:
- You live in a country which has good-quality insurance options and has the rule of law.
- Usually if you are an expat in the USA, local coverage makes sense, for legal reasons.
- If you live in developed country and your husband or wife comes from that person. For example, you are married to a Singaporean, Japanese or Australian person, and you are getting the coverage for them.
- The last point is especially important if your partner doesn’t speak much English. This point can be negated with some of the more tech-savvy life insurance firms which makes claiming easy.
I heard many insurance firms don’t pay upon death?
Provided you haven’t lied on your application form and have heard the exclusions, the policy should pay as expected.
The bigger issue is value for money, rather than not paying.
Do you offer insurance?
My main services are financial and investment management services. I do offer insurance.
I tend to prefer the lower-cost, online-based (or heavily technologically-dependent firms) as they can offer expats and indeed locals better insurance options, for a cheaper price with less hassles.
Sometimes I can offer discounts on the stated online price as well.
What are the biggest mistakes expats make with life insurance?
The biggest mistakes I have seen in the expat market are:
- Assuming that brand names matter, especially brand names linked to our home country. In particular, assuming that big insurance firms are likely to pay out claims more quickly. In fact, they are usually overly bureaucratic and slow.
- Due to the last point, many expats end up buying expensive policies.
- Getting whole of life insurance, at least in most situations.
- Not getting enough coverage, or too much. Not working out how much is needed in a mathematical way. The people who are most likely to assume they don’t need coverage are business owners. The kinds of business owners that have a lot of on-paper wealth, but it is often held in illiquid assets.
- Knowing you need coverage, but delaying, and eventually paying more. Often times, you get better premiums when you are younger.
- Thinking the life insurance firms needs to have an office where you live. It is best to focus on a firm that has online processes which allows you to claim no matter where you are in the world.
- Thinking that it is a good idea to have life, health and income protection from the same insurer. This only makes sense if each product is good.
Most expats do not need whole of life policies, which are more expensive. Term insurance is cheaper, together with doing investments separately.
From the four policies reviewed here, two are much cheaper. However, these two options are more difficult to buy these days and/or cheaper options exist in the market.
The amount of life coverage you will need as an expat, will depend on several things, including your lifestyle and liquidity of assets.
In general, expat coverage makes sense. In certain, limited situations, getting local coverage can be worthwhile.
For expats who have existing investment policies held offshore, the article below would be useful reading.
It includes countless comments at the bottom from people who hold the policies.