Moving to another country is a major life change that brings a host of new challenges — from finding a home and a job to building new friendships and adjusting to an entirely different environment. But what about your life insurance? If you have a policy in Canada, will it still work in a new country? Let’s find out.
Why Moving Abroad Complicates Life Insurance
In most cases, your Canadian life insurance policy will still be valid even if you move abroad. However, you may see many changes to your policy while your health condition remains the same. A new home means new health risks that can influence your insurability.
How Insurers View Residency vs Location
“Residency” and “location” may sound similar to you, but these two things matter a lot to insurers.
Location (your street address or the state/province you reside in) doesn’t have a lot of influence on your life insurance premiums or underwriting. Let’s say you move to the United States. Whether you live in a state that’s prone to natural disasters or your state doesn’t get disasters, your premiums won’t be affected.
However, your residence (legal living status, including the country you reside in) matters in calculating your risk. You may see different rates if you live in a developed country than if you live in a high-risk country, such as one in the midst of conflict or under sanctions.
How Insurers Verify Deaths Abroad
Generally, life insurers verify deaths abroad through a valid death certificate issued by the country where the death occurred. If the certificate is issued in a language not used by the insurance company, it may need to be translated into English or another language the company uses. Since verifying deaths abroad is generally tougher and some people may fake their deaths for an insurance claim, insurers may hire investigators to look into any suspicious death claims.
Should You Buy a Policy in Your New Country?
Whether or not to buy a new life insurance policy in your destination country depends on your life insurance needs. If your insurance needs don’t change and you still have your existing life insurance policy, you can keep it active as long as you stay up to date on your payments and don’t let your Canadian banking account lapse.
You can also find a different life insurance policy in your destination country and cancel your old one if you don’t want to own multiple insurance policies. It might be a good idea to compare your existing policy with the new one to see whether you should stay with the current insurer or find a new one.
Life Insurance Policies That Handle International Relocation Better
We’ve established that as long as you stay current on your payments and don’t let your Canadian banking account lapse, you can keep your life insurance policy even if you leave Canada. However, different types of life insurance policies may have some unique challenges when it comes to moving abroad. Take a look at this table for a quick summary:
| Policy Type | Portability Abroad | Typical Challenges | MyChoice Insight |
|---|---|---|---|
| Term life insurance | Generally able to be taken abroad | Usually none, term life insurance is straightforward | You can still get term life insurance coverage abroad as long as your payments are current |
| Whole/universal life insurance | Generally able to be taken abroad | Potential tax implications under your new country’s rules for your cash value component | To ensure you can access your cash value or insurance earnings without issue, you may need to consult with a financial advisor well versed in your destination country’s laws |
Checklist: What to Do Before Leaving Canada
Preparing to move outside of Canada? Here’s a handy checklist of things to do regarding your life insurance before you leave the country:
- Inform your life insurance provider about your move outside of Canada.
- Provide your new contact information, especially phone number and home address, to your insurer.
- Check your policy documents to understand how your coverage may change if you live outside of Canada.
In addition to these insurance-related preparations, it’s also a good idea to apply for the Registration of Canadians Abroad to get advisories from the Canadian government about your destination country. You should also check which Canadian foreign representative presence is the closest to you to ensure you can seek support if you need it.
Key Advice from MyChoice
- You generally don’t need to cancel your Canadian life insurance policy and get a new one from your destination country’s insurer. However, you can still do so to potentially get a better insurance deal.
- Always stay up to date on your premium payments and don’t let your Canadian banking account lapse if you plan to keep your Canadian insurance policy when living abroad.
- Consult with a financial advisor who knows your destination country’s laws to get clarity on how your policy’s cash value can be affected when you move abroad.