Death without protection
Many people focus on their financial health during their lifetime. They spend a great deal of time and money boosting financial wealth so they can live the life they desire. For those who wish to become or are already expats, you may be on track with these goals of building wealth to be used during your lifetime. But, what happens if you died today? What financial hardships would be present to your loved ones? Ultimately, dying without life insurance is one of the most complex, hard to pay for, and essential components of financial protection. In short, it is not something you want to happen.
Consider the short term needs of your family
Life insurance, savings accounts, or other financial instruments can help you to tuck away money for this type of need. However, depending on the country you are living in, the financial accounts you have, and probate risks, you may not be leaving behind money to your family for use in the short term. For example, for some expats living in countries with estate laws and probate systems, once a person dies, his or her estate goes into a holding pattern for months, if not a year or more. During that time, funds become less accessible to family members because collectors, for example, and others owed money to by your estate have the right to voice this need.
What would happen to your spouse, partner, or family if they did not have access to your accounts for a limited amount of time? This is why short-term life insurance is important. Life insurance is often protected from these types of laws, providing your heirs with access to the funds without having to wait for probate to allow for it.
Life insurance is accessible to the family right away for any need they have. It is commonly used to pay for last wishes, such as funeral costs and burial. It will help to make mortgage payments and to pay for day to day expenses when this is necessary.
Consider Your Family’s Financial Needs
Perhaps you are living with your partner in Dubai or Abu Dhabi, etc. No matter where you are, consider what would happen to you and to your family if you passed away suddenly. What types of debts are you leaving behind? What types of financial protections are your family members going to be without? Some of the most common areas of concern include the following:
- Are you leaving behind a mortgage? Will family members be able to continue making payments towards it? Will they be forced to sell the home? Insurance can protect against this by paying off the mortgage.
- Do you have dependants? Individuals with dependants often need financial support that protects a certain quality of life that the child is accustomed to. What’s important here is to ensure that the remaining parent is able to have funds needed to care for that child.
- Are there funds set aside to pay for the college education for your children? It is not always a requirement, but many parents want to ensure their child’s education is completely paid for so that the child gets the firm start he or she should.
- Do you have a business? If you were not in that business any longer, would it continue to survive? Is it relying on a source of funds from you to continue?
- Do you have a partner, perhaps one that is not recognised by marriage or other loved ones that you provide financial support for? If so, having insurance or other funds set aside to meet those needs is important, especially if courts are unlikely to recognise these individuals in a will or estate plan.
Dying without protection, wherever you are in the world albeit Dubai, Abu Dhabi, etc. can be a financial nightmare for those you leave behind. Any financial support you are providing today for anything could be put at risk should you die suddenly. Life insurance, including policies for expats, can help to minimise or stop this blow from occurring. It can become the financial lifeline of a loved one who is already struggling with your loss.
Death without protection does not have to happen for most people. As such, speaking to an independent financial adviser and then implementing a robust strategy can give you and your family peace of mind in this important area.
As an expat expert, I am on hand to help with all of the above and more.
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Mike Coady is an award-winning financial expert and a well-known leader in the financial industry.
Having taken two of his previous firms to Chartered Status in the UK and also achieved the prestigious National IFA of the Year Award – Highly Commended.
Mike is qualified to UK Financial Conduct Authority (FCA) standards, a member of the Chartered Insurance Institute, a Fellow of the Institute of Sales Management (FISM), and a Fellow of the Institute of Directors (FIoD).
Blog published by Mike Coady