It’s important to consider how your foreign travel plans might affect your life insurance, as some insurers may delay or even deny your application if they learn that you’ll be visiting certain countries or regions. Each life insurance company will approach foreign travel differently in their applications.
A few years ago, as a part of a client’s financial planning we determined that she had a need for life insurance. She wanted to ensure her mortgage and student debt were covered, in case of premature death. She was healthy and active, and had no major family history of illness. It did not appear there would be any issues as it related to underwriting.
Unfortunately, the stumbling block during underwriting turned out to be the client’s foreign travel history. She worked for a non-profit and her job required her to visit regions impacted by natural disasters and conflict. This led us to seek out life insurance options from providers where her travel history would not impact her qualification, and we were able to successfully place a policy.
Foreign travel can have a significant impact on a new life insurance policy application. Countries or regions, especially those marked as ‘Avoid’ on Canada’s foreign travel advisory list can cause applications to be postponed or outright denied.
Why is life insurance necessary for travel?
Although travel insurance is a product on its own and has its benefits for your own health during your travel, having life insurance will secure your loved ones in the case that something happens to you. Travel insurance is only able to help you recover from unexpected mishaps during your travels, such as misplaced luggage enroute or last minute flight cancellations. Travel insurance only covers you – but what about your dependents back home? That’s why life insurance is necessary for travel: it provides protection for your family at home in the case that something happens to you.
What questions do insurers ask regarding foreign travel?
Foreign travel is often considered as a non-medical condition that affects your chances of being approved of life insurance. Depending on the insurer, questions regarding foreign travel can be limited to a period of time prior to application and/or future travel plans. It can require an extensive declaration of all areas already travelled or intended or a very basic and simple question with regards to travel. Questions may also include asking about your purpose of travel and length of stay.
In most cases, applicants that intend to travel outside Canada or the United States, or those that travel extensively are asked to complete a “Foreign Travel Questionnaire”. Depending on your travelling factors, such as the regions or countries visited, this can have no impact on the approval of the application, create an exclusion (ie. if insured dies in a specific country), or in rare cases deny or postpone the policy. Moreover, underwriting decisions from your answers can range from preferred or standard rates to a rated policy.
Foreign travel presents a risk factor for you and your life insurance. Depending on the following factors, your life insurance might be delayed or declined all together:
Planned Travel Destination: Certain countries, areas, and regions will cause you to be declined due to the hazards or risks there, such as possible natural hazards and climate. You can check if the country you’re visiting is safe or not on Canada’s travel advisory website.
Travel History: Insurers are likely to check your travel history going back a few years. This is done to determine how frequently you travel and where. Your life insurance premiums or application could be affected by your history of travel to specific countries. You are expected to be totally honest about all past and planned trips on your application.
Purpose of Visit: Aside from the travel locations, the purpose of the visit will also affect your life insurance. For example, people who work in high-risk occupations or sometimes those that do humanitarian work in foreign countries are less likely to get approved.
Length of Stay: How long you plan on staying will also affect your life insurance: any stays longer than 6 months will have the insurance provider assess your application on a case-by-case basis. Insurers might underwrite you as a foreign national if you stay longer than 6 months, which will limit your benefits and coverage, and increase your premiums.
As such, it is prudent to work with an expert to determine the optimal solution for your particular circumstances. Below are some examples of Foreign travel questions that form part of life insurance applications from some of Canada’s best life insurance providers:
- a) Have you traveled, resided, or worked outside North America in the past 12 months or have any plans to do so in the next 12 months? (If Yes, provide details in Comment Sections including length of time outside of North America, dates, and purpose of trips)
- b) Has anyone proposed for coverage intend to reside or travel outside of Canada for more than four consecutive weeks?
- a) Within the past 12 months have you travelled, lived or worked outside of Canada and the United States? If yes, provide details including city or region, country, reason, frequency and duration.
- b) Within the next 12 months do you intend to travel, live or work outside Canada and the United States?
- Do you plan to travel outside North America, the Caribbean (excluding Haiti), the United Kingdom or the European Union countries for more than 12 consecutive weeks in the next 12 months?
- a) traveled or stayed outside of Canada or the United States in the past 12 months?
- b) Do you intend to do so in the next 12 months?
- Other than travel of 180 days or less per year within North America, European Union countries, the UK or the Caribbean, do you have plans to travel or reside outside of Canada in the next 12 months?
- a) Have you traveled outside of Canada or the United States in the last 12 months?
- b) Do you plan to travel outside of Canada or the United States in the next 12 months?
- c) Do you plan to change your country of residency in the next 24 months?
- In the next two years, do you plan to travel or reside outside of Canada or the United States?
- With the exception of travelling 6 months or less per year within North America, the Caribbean or European Union countries, do you have any plans to travel or reside outside of Canada in the next 12 months?
- If “yes”, provide details: countries, cities, purpose of travel, length of stay and expected number of trips per year.
- a) Do you expect to change your country of residence?
- b) Do you expect to travel outside Canada and the United States within the next 12 months?
- If yes (to question above), will you be traveling to a Caribbean or Mexican resort for less than four weeks, or traveling by cruise ship?
- Do you have any other travel plans?
- a) Within the last 2 years, traveled outside of Canada or the United States of America or have plans to do so in the future? If yes, please complete the Foreign Travel Questionnaire.
- a) In the last two (2) years, have you travelled or lived outside of Canada or the United States? If yes, indicate where, when and for how long.
- b) In the next two (2) years, do you intend to travel or live outside of Canada or the United States? If yes, complete Foreign Residence and Travel questionnaire.
- a) In the last 12 months have you travelled or resided outside of Canada? (Exclude travel or residence of less than 6 months in the United States)
- b) In the next 12 months do you intend to travel or reside outside of Canada? (Exclude travel or residence of less than 6 months in the United States)
Keep in mind that life insurance companies can change wording in their applications at any time. A few years ago, for example, Foresters Financial asked: “Are you planning to travel, work or live outside of North America for more than 1 month? (If YES, give details on frequency, location and length of stay)” compared to the 3 questions they now ask as seen above.
Is Travel Outside of Canada Covered by Life Insurance?
The majority of the time, yes: travel outside of Canada is covered by life insurance. However, keep in mind that a history of travel to specific countries may raise your premiums or result in the denial of your life insurance application. Insurance firms are for-profit businesses like any other. Correctly estimating an applicant’s mortality risk is one method they use to reduce their financial exposure, which in turn aids in their ability to charge fair prices. That’s why underwriters take the time to investigate anything that might make a client a higher risk. A family history of a disease or an unsafe hobby are two examples. When applying for a life insurance policy, you must disclose your recent travel history as well as your future travel plans.
If you frequently travel to a dangerous country for any reason, your insurer may:
- Increase your premiums
- Exclude certain countries/regions from your life insurance policy. This would mean that you aren’t covered if you choose to travel to excluded areas.
- Deny your insurance application completely
Which Countries Invalidate My Life Insurance?
The Canadian government provides the following classifications for a country’s overall risk level on its website:
Do not worry if you’re visiting any of the countries in categories 1 or 2. You will be eligible for the regular premiums and insurance protection. However, if you are visiting a country in the third category, the insurer will ask you about the length of your stay and the reason for your trip. A higher rate could apply if your stay is less than three months. However, a longer stay could result in an increase in your premium. If you haven’t traveled to a high-risk country in the past year and have no plans to do so in the near future, your insurer may waive the additional fee. The fourth group includes dangerous regions that are experiencing conflict or high tensions, like North Korea, Afghanistan, Iran, and Iraq. Life insurance companies may refuse to cover you if you have ever visited a high-risk country.
Frequently Asked Questions (FAQs) about the impact of foreign travel on life insurance
Life insurance companies want to know about your traveling habits because it can determine your rating. Your travel habits can show how much of a risk it can be to provide you with coverage. Your travel habits can also be considered as a non-medical risk depending on some travel factors.
Foreign travel can be a risk because of numerous factors regarding your health and safety including, but not limited to:
- Risk of travel-related illnesses
- Risk of infectious or foreign diseases
- Conflicts occurring in travel destinations
- Environmental risks
- Risk of poisonous or infectious insect bites that cause health complications (such as Lyme Disease)
- Risk of excessive sun and heat
Travel insurance isn’t better than life insurance because typical travel insurance policies will secure only you for your travels, but having life insurance will secure your loved ones in the case that something happens to you.
Insurance companies will take into consideration a couple of factors when you’re travelling. These factors are: planned travel destinations, travel history, purpose of visit, and length of stay.
Contact Protect Your Wealth For Experienced Advice
If you travel often or plan to work in a foreign country, your life insurance policy is dependent on these travel plans. Your past history of travelling, the length of stay, the purpose of visit, and any future travel plans are crucial in deciding whether your insurance cover will be valid abroad. Luckily, there are many options, such as Simplified Issue policies, many of which do not ask a travel-related question. Working with an expert can help you identify the best solution to fit your specific circumstances.
As your trusted and experienced life insurance broker and financial advisor, we would be happy to provide further analysis for you and your family’s specific circumstances. Contact Protect Your Wealth or at 1-877-654-6119 today! We’re proudly based out of Hamilton, and service clients anywhere in Ontario, British Columbia, and Alberta, such as Burlington, Oakville, Abbotsford, and Medicine Hat.