Purchasing Life Insurance While Stationed or Living Overseas: A Guide for U.S. Military Veterans

As a U.S. military veteran living overseas, you’ve already navigated uncharted territory, braved unfamiliar landscapes, and adapted to new cultures. Now, as you consider purchasing life insurance from abroad, you might once again find yourself facing an unfamiliar and potentially daunting task.

American insurance companies, including USAA, often do not offer insurance policies to individuals residing outside the United States1. And yes, that includes active-duty servicemembers stationed overseas. It doesn’t make much sense, but it is what it is. If you have already run into these dead-ends, you may be feeling unsure about how to protect your loved ones financially in the event of your passing. However, despite this challenge, there are viable options available to you.

This blog post will help you understand the obstacles you might face, explore potential solutions, and ultimately secure your financial future – no matter where in the world you call home.

A Note About Military Provided Life Insurance

This article essentially ignores SGLI, FSGLI, and VGLI. While those insurance policies are valid options for servicemembers and Veterans, their policy limits ($500,000 for SGLI/VGLI and $100,000 for FSGLI) are insufficient in many cases and their costs do increase over time.

Understanding the Challenges

Firstly, it’s important to understand the hurdles you may encounter when trying to purchase life insurance overseas:

Limited Options: As a U.S. citizen living abroad or with split residency, your choices for buying life insurance with U.S. companies are limited1. Many American insurers restrict their coverage to U.S. residents due to regulatory constraints and perceived (even if not real) risks associated with insuring expatriates2.
Validity Issues: Some insurance policies sold by international insurance companies are only valid for the country in which they are bought3. This means that if you return to the U.S. or move to another country, your policy may become void.
Payout Concerns: While life insurance generally provides a payout if the policyholder dies overseas, certain exceptions could apply4. For instance, if you pass away in a country that’s under U.S. sanctions, your beneficiaries might not receive the death benefit.
Medical Exams: Most insurance companies offering term-life or whole-life policies require some sort of medical exam to verify the health of applicants. Depending on the reason you are overseas, it may be more difficult to access a provider that can complete the exam requirements.

Your Path to Coverage: Three Viable Options

Despite the challenges, you still have options to secure life insurance coverage. Here are three possibilities:

Employer-Based Coverage: If you’re currently employed overseas, your employer may offer a group life insurance plan. These plans often provide worldwide coverage, regardless of your location or medical history. They can be a convenient and cost-effective way to secure some level of life insurance protection. However, the amount of coverage may be limited. A common upper limit is 10 times annual base salary5. The critical weakness here is that coverage is tied to employment. If you are terminated, the life insurance coverage often ends immediately. This situation occurs more than you might think.
AAFMAA (Armed Forces Benefit Association): AAFMAA offers life insurance policies to members of the American armed forces and Veterans, including those living overseas6. This can be a particularly good fit for military veterans. AAFMAA will sometimes accept a recent military PHA in lieu of a medical exam. The cost of these term policies and the upper limit of coverage will fit the needs of Veterans in many situations.
Local Insurance Companies: Another option is to purchase a policy from a local insurer in your country of residence. For example, I had a client who was working in Qatar and found a suitable policy with Doha Bank. Local insurers understand the country’s regulations and can offer policies tailored to expats. However, you’ll need to navigate language barriers and unfamiliar insurance norms. Plus, the policy may not remain valid if you later decide to move back to the U.S. or to another country.

The Importance of Professional Guidance

Given the complexity of securing life insurance while living overseas, professional guidance can be invaluable. A financial planner with experience in cross-border insurance matters can help you understand your options, compare policies, and make an informed decision. They can also help you navigate the application process, which may involve additional paperwork and medical examinations due to your overseas status7.

Furthermore, working with a financial planner can help identify the amount of life insurance you actually need. Rules of thumb are helpful, but specific details about your finances and objectives may create a need for more life insurance than the rules of thumb suggest. Or, perhaps, you have little need for life insurance at all!

Final Thoughts

Purchasing life insurance while living overseas can seem complicated, but it’s far from impossible. With careful research, consultation, and planning, you can secure the financial future of your loved ones no matter where you live.

Your service and work overseas should not limit your access to life insurance. It’s about finding the right policy and right source that fit your unique situation. Remember, the road to securing life insurance as an expat may have a few more twists and turns, but with persistence and the right guidance, you can navigate this path successfully.

If you’d like to talk to one of the MFAA members about life insurance or another financial challenge, you can find them here.

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