One thing that continues to surprise me about working with expats in this region is how so few of them have put protections in place for their loved ones in the rare event that something should happen to them. The sad reality is actually that these events are not as rare as most of us would like to believe. All you need to do is take a quick look at the figures for road mortality rates in South East Asia and you will likely come to the conclusion that, as great as life is in this part of the world, nothing comes for free. The trade-off for life in paradise (at least in my opinion that’s what this region is), is that statistically speaking life is a bit more dangerous here.
The main reason so many well-paid expats go without proper life insurance coverage – and thus leave their children and other loved ones needlessly exposed to the financial burdens that would suddenly fall on them in the event of a sudden and unexpected death – is partially due to receiving poor advice from many of those in my industry. In any highly regulated jurisdiction in the world, advisors are required to make sure protection is in place before even beginning to have the conversation about investments, etc. Unfortunately as the latter pays much better and in the international environment advisors have more freedom, life insurance is quite frequently glossed over for the quicker buck of setting up some form of an investment account.
Also adding to the problem is human nature. Life insurance has been said to be the hardest thing on the planet to sell, yet nobody wants to go to their grave knowing their children are without the financial support needed to get them through their education and give them a fair chance in the world. The human mind does not like to think about the fact that someday we are going to die, yet financial planning is essentially a binomial situation. We either live a long time and thus need to save towards retirement, or we die young of some unexpected disease or accident and should have insurance in place to protect our loved ones. Most people naturally are quite happy to plan and save for retirement because in the back of our minds we would like to believe that car crashes, heart attacks, and cancer are things that only happen to other people. The reality is that these things can and do happen and can happen to anybody. While that is brutal and harsh truth, burying your head in the sand and pretending it isn’t so is a denial that could someday bring extreme hardship to the ones that you love most.
To end on a more positive note since this is a slightly gloomy subject to be discussing, I look at paying life insurance premiums as the one time in life you can use Sod’s Law to your advantage (that’s Murphy’s Law for the Americans out there). Paying for life insurance is the one time in my life that I am quite willing to make a bet and hope to God that I not only lose said bet, but lose it in a big way.
David Mayes MBA provides wealth management services to expatriates throughout South East Asia, focusing on UK Pension Transfers. He can be reached at david.m@faramond.com. Faramond UK is regulated by the FCA and provides advice on pensions and taxation.
