Life Insurance for Expatriates in Canada

In recent years, Canada has become one of the world’s leading immigration hubs, accepting more than 500,000 immigrants annually.

However, the recent spike in living costs and housing has resulted in many Canadians looking to relocate to new countries for better work opportunities, nicer weather, and lower taxes. 

While transitioning to a new country is an exciting and challenging experience one critical aspect that often gets overlooked during this transition is life insurance. 

This article explores why life insurance is essential for expatriates in Canada, the challenges they face in procuring it, the available solutions, and common legal and regulatory aspects governing life insurance policies.

Why is Life Insurance Essential for Expatriates in Canada?

Life insurance provides financial security to dependents in the event of the policyholder’s untimely death. This security is vital for expatriates as they may be the primary breadwinners with family members relying on their income to live comfortably. 

Life insurance payouts or death benefits can help dependents cover a wide range of expenses such as funeral costs, outstanding debts, and everyday living expenses, ensuring they are not left in financial distress.

Life insurance can also serve as an essential financial planning tool. It can help with estate planning, and even provide tax and saving benefits depending on the type of policy one opts for. 

This can be particularly important for expatriates who have assets in multiple countries. Life insurance can help mitigate any cross-border estate complications and ensure quick distribution of wealth.

Finally, having life insurance can provide peace of mind. Knowing that your family’s financial future is safe, regardless of where they might be, gives confidence and allows expats to focus on building a new life.

Challenges of Life Insurance Procurement for Expatriates

Procuring life insurance as an expatriate in Canada comes with its unique set of challenges. From eligibility requirements to the cost of premiums and legal aspects, all have to be considered when choosing a policy.

Eligibility and Requirements

Depending on your current residency status, securing a life insurance policy can involve complex documentation and requirements, such as certified translations of medical history, a medical exam that has to be conducted in the country of origin, disclosure of foreign assets, and thorough identity and family history documentation. 

Insurance providers will also typically require detailed medical histories and may have specific residency requirements that expatriates who have lived in multiple countries may struggle to provide which can complicate the residency status requirements for certain policies.

Higher Premiums

Insurance companies may view expatriates as higher risk due to factors such as travel to potentially dangerous regions, differing healthcare systems, and the perceived instability of living in a foreign country. 

Currency fluctuations also have to be accounted for which can affect premium payments and benefits received. 

Expatriates who earn income or have financial obligations in different currencies can face difficulties managing premium payments and policy benefits. 

Currency fluctuations can also affect the affordability and value of life insurance policies, making financial planning more complex and expensive.

Legal & Regulatory Aspects

Life insurance in Canada is heavily regulated to protect consumers and insurance providers. As a result, expatriates must understand both the Canadian insurance regulations and those of their home country to ensure compliance and avoid potential legal issues. 

This dual regulatory environment can complicate obtaining and maintaining life insurance. 

Tax Considerations

Life insurance policies can have different tax implications depending on the country of residence and the policyholder’s nationality. Understanding the tax treatment of life insurance in both Canada and the home country is essential to avoid unexpected tax liabilities.

Expatriates should also be aware of the potential impact of international treaties and agreements on their life insurance policies. 

For example, tax treaties between Canada and other countries can influence the tax treatment of life insurance benefits. Keeping informed about such agreements can help expatriates make better-informed decisions regarding their life insurance. 

Solutions for Life Insurance Procurement for Expatriates in Canada

One option is to choose an international term life insurance plan. This policy is specifically designed for expatriates and offers worldwide coverage, ensuring that you and your family are protected regardless of where you live. 

Another solution is to work with insurance brokers who specialize in expatriate insurance. These brokers have expertise in the field and can guide you through finding the most suitable policy that offers competitive premiums and comprehensive coverage.

Expatriates can also explore group life insurance options through their employers. Many multinational companies offer group life insurance policies as part of their employee benefits package. 

These policies often come with lower premiums and fewer restrictions than individual policies, making them an attractive option for expatriates.

Life Insurance for Expats in Nova Scotia

While there are challenges in procuring life insurance, such as higher premiums, regulatory complexities, and issues related to residency and medical history, there are also viable solutions available that can be affordable and meet specific coverage needs. 

To learn more about what type of life insurance options are available to you as an expat call McIver Insurance now at 1-902-220-3279 or email [email protected]

We specialize in all types of insurance and are Halifax’s most trusted insurance broker. We will help you find the best policy that meets your coverage needs and budget and guide you every step of the way!

FAQs

Q)  What is the difference between local and international life insurance policies for expatriates in Canada?

The main differences between local and international life insurance policies include cost, coverage, and compliance. Local policies often have limited coverage and a greater perceived risk of insuring expatriates while international life insurance is designed specifically to meet the needs of expatriates worldwide. 

Q) What are the typical costs of securing life insurance as an expatriate in Canada?

The average cost of life insurance in Canada is approximately $34 a month. However, expatriates may have to pay additional costs depending on the type of riders and coverage terms they are looking for.

Q) Can I maintain my existing life insurance from another country while living in Canada?

Yes, as long as your existing life insurance covers you when living overseas you can keep the same policy.