Insurance policies and emigration: What happens to them and what you need to know

Embarking on a new adventure abroad is an exciting journey, but have you considered how it affects your South African insurance policies? While you might cancel your vehicle and home contents insurance policies if you no longer have these assets in South Africa, other policies, like life and retirement annuity policies, require attention. In this guide, we address your frequently asked questions about South African insurance policies and emigration.

Let’s start with your life insurance policies after emigration:

Does South African life insurance cover death overseas?

The coverage for death overseas depends on various factors, including:

• Your specific policy: Each life insurance policy has its own terms regarding geographical scope and exclusions. Check your policy document for details.
• Exclusions: Some policies exclude coverage in certain countries due to risks like war or civil unrest.
• Nationality: Policies may extend coverage to all nationalities or limit it based on citizenship or region.
• Duration abroad: Coverage might be limited to short trips or extended stays.
• Cause of death: Certain activities, such as high-risk sports, may be excluded from coverage.

What happens to your South African life insurance when you move abroad?

This depends on:

Your policy’s terms

• Overseas coverage: Check if your policy covers you abroad and if there are any restrictions.
• Duration of coverage: Some policies limit coverage to temporary stays.
• Adjustments: Some insurers allow changes like adjusting beneficiaries or premiums for overseas residents.

Your circumstances

• Residency status: Changes in residency can impact policy validity, premiums, or taxes.
• Nationality: Coverage may vary based on nationality.

Possible scenarios after emigration

Your life policy remains valid with adjustments

• Limited coverage or higher premiums may apply.
• Expect additional documentation and processing time for overseas claims.

OR

Your life policy requires changes

• Consider adjusting coverage, beneficiaries, or premium amounts.
• Tax emigration may affect policy terms.

OR

Your life policy becomes invalid

• Exclusions or non-payment of premiums can invalidate the policy.

 

Steps to take pertaining to insurance policies and emigration

1. Contact your insurer to understand your policy’s applicability abroad.
2. Seek advice from a financial advisor familiar with international financial planning.
3. Explore alternative life insurance options if needed.

 

Can South African life insurance be paid to someone abroad?

Yes, benefits can be paid abroad, but consider:

Beneficiary’s residency

• Most policies require a South African bank account for payouts.
• Financial emigration may have additional regulations and tax implications.

Policy terms

• Check if overseas coverage is included.
• Expect longer processing times for overseas claims.

 

Can I cancel my South African retirement annuity?

Cancellation isn’t straightforward, but you can withdraw after ceasing tax residency in South Africa. Conditions apply, including a three-year non-residency period after March 1, 2021. It would help if you also kept in mind that early withdrawal of your retirement annuity funds will attract attention from SARS, which may lead to tax implications. It is, therefore, important to consider the tax implications on retirement funds.

Can I cash out my living annuity in South Africa?

No, living annuities cover retirement income. You cannot cash out on these annuities.

Apostil.co.za can help you navigate the process and tax implications of withdrawing your retirement annuity after emigration by partnering with leaders in the fin-tax sector.

Final thoughts

As you embark on your journey abroad, understanding the implications for your South African insurance policies is crucial. From life insurance coverage to retirement annuities, each policy requires careful consideration to ensure your financial security remains intact.

Remember, the specifics of your insurance policies can vary, so it’s essential to review your policy documents, discuss with your insurer, and seek guidance from financial professionals. Whether it’s adjusting coverage, understanding tax implications, or exploring alternative options, proactive steps can safeguard your financial well-being during and after emigration.

By staying informed and proactive, you can navigate the complexities of insurance policies abroad and make informed decisions that align with your long-term financial goals.