Life Insurance: Accidental Death Abroad, Are You Covered?

Life insurance is designed to provide financial protection to your loved ones in the event of your death. While most policies cover foreign deaths, there are specific circumstances in which they might not. It is important to review the terms of your policy and speak with your insurer to understand any limitations or exclusions that may affect your cover while abroad.

International life insurance policies are tailored to meet the unique needs of expatriates, frequent travellers, and individuals with global connections. They offer worldwide coverage, ensuring that the death benefit is paid out to beneficiaries regardless of where the insured person passes away. These policies can be particularly important for those who engage in high-risk activities or travel to dangerous countries, as regular life insurance policies may not cover deaths resulting from these activities.

Additionally, travel insurance policies can provide life insurance coverage for accidental deaths that occur while abroad. There are three types of life insurance policies available for travellers: Common Carrier, Accidental Death, and Flight and Airline Accident. These policies provide coverage for deaths or loss of limb due to accidents during travel or abroad.

International life insurance policies

International life insurance is designed for individuals who live or work in multiple countries or have an international lifestyle. It covers people who already have a domestic life insurance policy but are planning a move abroad, as well as expats and frequent international travellers who don't have any existing life insurance.

Key Benefits of International Life Insurance

Expatriates can choose from various coverage options, including term life, whole life, and annually renewable life plans.

Policyholders can pay premiums in various currencies and increase or decrease their level of coverage.

International life policies are portable, allowing policyholders to maintain coverage if they change countries or move frequently.

Types of International Life Insurance

There are two main types of international life insurance: term life and whole life. Term life plans are the most popular among expats and global travellers because of their economical premiums and flexible coverage terms. Whole life insurance plans are more expensive but provide lifetime coverage and are a good option for people concerned about their future health.

International Life Insurance Premiums

Premiums for international life insurance are calculated based on several factors, including age, nationality and country of residence, coverage amount and term length, and lifestyle habits such as smoking.

Foreign death claims

The process of filing and settling a life insurance claim for a death that occurs overseas can be more complex than a domestic claim. The insurance company may require additional documentation, such as an official death certificate issued by the foreign government, as well as proof of the insured's identity. It is common for insurance companies to ask for more documentation or delay as they investigate. This can be due to suspicions of insurance fraud, especially if the death certificate or proof of death looks different from those in the US.

To prevent fraud, life insurance companies want beneficiaries to obtain proof of death. If you're a beneficiary running into trouble securing that proof, such as medical records or autopsy reports, reach out to the U.S. embassy in the country where the policyholder died. You can also hire an attorney who specializes in foreign death claims.

It is important for the beneficiary or beneficiaries to notify the insurance company of the insured's death as soon as possible, regardless of where the death occurred. The insurance company will then provide instructions on how to file a claim and the required documentation.

Repatriation of remains

Repatriation of mortal remains refers to the transportation of an insured person's deceased body back to their home country, along with the other formalities associated with this process. This can include:

• Removal of the body from the hospital
• Coordinating the post-mortem exam (if necessary) and/or dealing with local police
• Embalming, which is required for international transportation and must be done within 24 hours of death
• A coffin or container appropriate for international transportation
• Coordination with the Embassy/Consulate for cancelling the passport, getting an import certificate, and other customs/government formalities
• Transfer to the airport
• Shipping costs, such as air or ground transportation

The cost of repatriation can vary due to factors such as the distance travelled, location of death, government regulations in the country of death and the home country, and the weight of the deceased person. It may cost from $5,000 to $15,000 or more.

Repatriation insurance is a benefit that is included in most travel insurance plans, but the benefit amounts may vary. It is important to note that some travel insurance plans only cover repatriation if the death occurs from a covered sickness or injury, while others cover it even if the death is related to pre-existing conditions. Therefore, it is crucial to carefully review the terms and conditions of your insurance policy to understand what is covered and what is not.

In the event of a death overseas, it is important to notify the local Embassy or Consulate as they can offer advice and assistance in navigating local government regulations and making the necessary arrangements.

Risky activities and behaviours

When it comes to risky activities and behaviours, it's important to understand that life insurance policies may not provide coverage in certain circumstances. Here are some key points to consider:

• Disclosure of Risky Activities: Failure to disclose participation in dangerous or extreme activities, such as skydiving, base jumping, or rock climbing, can result in a denied claim. If the insured dies while engaging in these activities abroad, the insurance company may claim material misrepresentation and refuse payment. It is crucial to be honest about any risky activities during international trips.]
• High-Risk Destinations: Travelling to or staying in countries with political instability, poor healthcare systems, high mortality rates, or unsafe travel conditions can impact life insurance coverage. Some countries may be excluded by the policy due to acts of war, terrorism, or insurrection. It is important to review the policy's exclusions and restrictions before travelling to high-risk destinations.
• Traffic and Transportation Risks: Riding motorcycles, mopeds, or ATVs while abroad poses a significant danger to travellers. Traffic conditions in certain countries, such as the Dominican Republic, Thailand, Venezuela, and South Africa, are notoriously challenging. Driving or riding in these countries increases the risk of accidents and injuries. If possible, avoid driving or consider hiring a local professional driver.
• Water-Related Risks: Drowning is a leading cause of death for American travellers in certain countries. To reduce the risk of drowning, only swim at beaches or pools with lifeguards, supervise children, be aware of rip tides and strong currents, enter the water feet-first, and avoid swimming while intoxicated.
• Alcohol and Substance Abuse: Mixing alcohol or drugs with risky activities can have dangerous consequences. Life insurance policies typically exclude coverage for any loss resulting from the use or abuse of substances. This includes injuries or deaths related to activities like high-wire acrobatics, tubing, or diving into shallow water.
• Extreme Sports and Activities: Participation in extreme sports and activities, such as skydiving, BASE jumping, hang gliding, or free climbing, is often excluded from travel insurance coverage. Be sure to carefully review your policy's "General Exclusions" section to understand what activities are not covered.

It is important to carefully read and understand the terms and conditions of your life insurance policy, including any exclusions and restrictions related to risky activities and behaviours. Being honest about your travel plans and activities can help prevent issues with claims and ensure that your loved ones receive the intended benefits in the event of an overseas death.

Suicide

Most life insurance policies include a "suicide clause," which states that if the policyholder dies by suicide within a certain period after the policy is issued, usually within the first two years, the insurer may deny the death benefit or provide a limited payout. This clause aims to prevent individuals from taking out a policy with the intention of ending their lives soon after. After this exclusion period, however, most life insurance policies do cover suicide, and beneficiaries are entitled to receive the full death benefit.

The length of the suicide clause can vary depending on the insurer and state regulations. While most states enforce a standard two-year period, some states, like Missouri, Colorado, and North Dakota, have shorter one-year exclusion periods.

It's worth noting that different types of life insurance policies may have distinct clauses and conditions that impact coverage in these circumstances. Group life insurance policies, often provided as an employee benefit, typically include similar suicide clauses to individual policies. If the suicide occurs within the exclusion period, the death benefit may not be paid. On the other hand, military life insurance policies, such as those offered by Veterans' Group Life Insurance (VGLI) and Servicemembers' Group Life Insurance (SGLI), usually pay out the death benefit regardless of the cause of death, including suicide.

Whole life insurance policies may provide beneficiaries with the plan's cash value even during the exclusion period, and they can receive the full death benefit once the exclusion period ends.

If you have a history of attempted suicide, obtaining life insurance coverage may be more challenging but not impossible. Insurers evaluate the risk based on medical and personal history, including mental health. Table ratings or flat extras may be applied, resulting in higher premiums or additional charges. However, factors such as time since the attempt and current mental health status can positively influence the insurer's decision.

If you or someone you know is struggling with suicidal thoughts or mental health issues, it's crucial to seek help. Resources like the National Suicide Prevention Lifeline (1-800-273-8255) and the Crisis Text Line (text HOME to 741741) are available 24/7 to provide confidential support and guidance.

Frequently asked questions