Expats insurance – Only insure what you need!

Expat insurance is a big topic. You can insure just about anything these days. Where to start?

This week we are going to take a deep dive into the this topic. The good news is, for most people, most of the time insurance doesn’t need to get complicated.

If you want to simplify your life and do the right thing for your finances you should only take out insurance you really need. We’ll come to how you determine that first.

What kinds of insurance do you need?

How do you know if you really need insurance? Simple! You only need insurance when you can’t afford the loss.

That means you probably shouldn’t bother with mobile phone insurance. Can you afford to replace your mobile phone if you need to? For most people reading this, the answer is going to be yes.

Most people don’t loose their phones and if they did, though it would be annoying, they could easily afford to replace them. If you’re backed up to the cloud you won’t even loose any data.

Some people will argue that its worth it for peace of mind. A quick look on Money Supermarket shows that we are probably going to be looking at about £9 a month or £108 per year.

Why that mobile phone insurance may be costing you more than you think

Now, that doesn’t sound like much but whenever you pay for something you would do well to think about the opportunity cost.

Let’s say you invested that money in the global stock market and got 9% returns (which is what they are historically) over say 25 years because you were saving for your pension. That’s £10K right there. More than enough to replace a few mobile phones and still have plenty left over.

That’s just one example, but find a few insurance premiums you pay that you don’t really need, invest the money instead and your future self could really be in the money.

Now, I could go through most types of insurance and give you a few reasons why you probably don’t need them, but it’s probably easier to talk about the types of insurance that might be useful because let’s face it, there aren’t very many.

For most expats there are usually only going to be four types of insurance you should consider: Car, Homeowners, Life and Health.

So it’s worth going over these in a bit more detail.

Car insurance

If you have a car it’s a pretty safe bet that you need insurance. That’s because, in most countries, whist fully comprehensive is optional, third party insurance is mandatory.

In theory third party fire and theft should be cheaper than fully comprehensive, but that isn’t necessarily the case these days. However, I’m sure it goes without saying that where fully comprehensive is cheaper, you go for that one.

On the other hand, if third party is notably cheaper for you it may be worth it because most people don’t crash or have their cars stolen. If you drive a car you could afford to replace if you had to, then it may make sense to skip fully comp.

Homeowners insurance

For most people, the value in their property is substantial enough to need insurance. In other words, most people couldn’t afford to replace their house if it burnt down. Whether that’s a house overseas or one back in the UK doesn’t matter. Other types of house related insurance, such as contents is anther matter. Most people won’t need contents insurance.

Life insurance

Life insurance is another one of those that people mistakenly think they need when they don’t. It is going to depend on whether or not your family would be able to survive without you and in many cases they would.

If your family relies solely on your income then you probably need life insurance. However, if your family could get by without you because your partner works or you have savings and investments then you may not need life insurance.

Health insurance

Though there’s every chance you may not need any of the other types of insurance we’ve covered so far, in all likelihood you are gong to need some kind of paid expatriate healthcare.

The exception to the rule would be if you live in a place where cash payments for medical services are actually affordable and the medical standards are high enough, but for most people that’s not going to be the case. For the most part, it will make sense to have some kind of health insurance.

That could be a painful notion if you are British. I mean, thanks to the NHS we grow up thinking healthcare is free! But in reality that’s not really the case because we end up paying stealthily through national insurance contributions and if you crunch the numbers you can find it’s actually on the pricey side.

The cost of health insurance

Think about it this way, median weekly pay for full-time employees in the UK was £640 in April 2022 which equates to just over 33k per year. Based on those numbers, Mr UK average would be paying about £200/month on national insurance. OK this doesn’t just cover health costs but that’s the bulk of it.

Now, we can’t talk about health insurance without talking about our good friends across the pond in the good old U S of A.

There are two reasons for this. The first is cost.

I’m pretty sure most Americans don’t think health care is free. In fact, according to Money Geek the average health insurance cost per month for an American paying their own is approximately $450 which at the time of writing equates to about £368. Not far off double what Mr average in the UK is paying.

The other reason we have to talk about the US is due to the way in which the world is divided in two parts geographically when it comes to healthcare.

Essentially, the world is split into two areas. On the one side there’s …………the US. Johny no mates. Totally on its lonesome. And on the other side there’s……..well…… absolutely everywhere else.

US vs the rest of the world

The best news about this (for everybody who doesn’t live in America) is the fact that the expensive bit of the world is the US and this means everywhere else is cheaper.

Now that’s even good news for Americans because what it means in practice is they are going to pay less as expats than they would at home. In other words the cost of expat health insurance for Americans abroad is likely to be much lower than what they pay at home.

And again taking into account national insurance contributions, the best way to save money for both Brits and Americans could be by moving abroad.

The cost of expat health insurance

Companies like Safety Wing have products like Nomad insurance that is going to cover most people’s medical and travel needs from about $46/month (approx £38/month at the time of writing).

Here’s an example of the expat healthcare you are going to get with that:

• Max Limit – $250,000 ($100,000 for 65 years & above).
• Deductible – $250.
• Hospital – Room and nursing services.
• Intensive care – Up to the overall maximum limit.
• Ambulance – Usual, reasonable and customary charges when covered illness or injury results in hospitalization.
• Urgent charges – $50 co-payment, not subject to deductible.
• Physical therapy and chiropractic care – Up to $50 per day. Must be ordered in advance by a physician.
• Emergency dental – Up to $1,000. Not subject to deductible.
• All Other Eligible Medical Expenses – Up to the overall maximum limit.

Whilst that’s going to cover most peoples’ needs they obviously don’t cover everything. Notable exclusions from Safety Wing’s policy are as follows:

• High risk sports activity
• Pre-existing disease or injury
• Cancer treatment

Now, whilst you are unlikely to be able to get cover for anything pre-existing, the other two could be covered if you take out the right critical illness insurance.

Critical illness insurance

If you need insurance for a year abroad taking part in high risk sports you probably need to look at critical illness insurance.

We’re sure it goes without saying, that most people won’t need this. It’s specialised and being a bit more complicated than standard health insurance, we’d again recommend doing a bit more research if you think you need this one (you might want to start your search with Unbiased).

Can British expats use the NHS?

We’d be remiss if we didn’t just cover one final point before we wrap up.

Not surprisingly many expats question whether or not they can use the NHS.

And unfortunately the short answer is, no they can’t. That’s because the NHS is for residents only. In other words you need to be living in the UK permanently to get NHS treatment.

Yes, if you were knocked down by a car, I’m sure they’d operate first and ask questions later but for anything more long term you’ll be out of luck unless you move back properly.

Expat insurance – summary

Expat insurance could cover just about everything. Car, Home, Life and Health are the big ones, but most expatriates will probably only need health insurance.

The money you save on insurance can be invested and grown.

The cost of expat health insurance is probably a lot lower than you think. Certainly, when Brits take into account National Insurance contributions, both they and Americans will probably pay less for expat healthcare than they do at home. (Safety Wing’s Nomad insurance starts at about $46. Approx £38/month at the time of writing).

If you think you’ll need life insurance or critical illness insurance it may be worth starting your search with Unbiased.

And finally, no you can’t just sneak back and use the NHS!