Keeping a UK life policy or buying expat cover

Moving abroad does not automatically cancel a UK life insurance policy, and it does not automatically keep it working either. Life insurance may cover death overseas, but this depends on the policy terms, including any exclusions or limitations¹. Policies do not have standard wordings, and some have exclusions or make claiming harder if you develop a terminal illness². The practical question is not "UK or expat" in the abstract: it is whether your existing policy continues, whether you can still pay for it, and whether a new policy is available to you at all.

The second half of that question has a blunt answer. Most insurance companies in the UK can only offer cover to customers who are resident in the UK¹, and Legal & General states that to apply you need to be a UK resident aged between 18 and 77². So for most people who have already moved, the realistic choice is keeping what they have, not buying a fresh UK policy from overseas.

What follows sets out how a UK policy behaves once you live abroad, what keeps it alive, how international cover differs, and where the gaps and the complaints routes are.

Whether a UK life policy still covers you after moving abroad

A UK life policy is a contract, and what it covers is set by its own wording. Aviva's guidance is that life insurance may cover death overseas, but this depends on the policy terms, including any exclusions or limitations¹. That is the whole answer in one line, and it is why two neighbours moving to the same country can get different outcomes from policies bought from the same insurer.

What a life policy does is narrow. Life insurance usually pays out only when you die, as a lump sum⁵, and it usually pays out only when you die, so a cancer diagnosis will not automatically pay anything⁶. It is not an investment and not a savings plan: when the policy term ends, so does the cover, and you will not get any money back³. If you are relying on it to clear a mortgage, that is what it does, and only on death.

Two features of the contract matter more once you are abroad. The first is the disclosure duty. You must tell each life insurer about any other policies you have or are applying for⁷. The second is that insurers expect to be told about changes that affect the risk. In travel insurance, most policies include a rule called an "ongoing duty of disclosure", and you are expected to let your insurer know if anything about your health changes before you travel, such as a new diagnosis, a change in medication, or being referred for tests⁸. Life policies are not travel policies, but the same principle of telling the insurer about material changes runs through both.

Where a policy does pay, the money is usually paid to a UK bank account. TSB's terms say payments are made as a lump sum in British pounds to a bank account in the UK, and the costs of arranging payment to a non-UK account are borne by the recipient³. That single line is why the bank account question below matters as much as the policy wording.

Legal & General: cover continues if premiums come from a UK bank account

Legal & General is one of the names a reader is most likely to already hold a policy with, so its rules are worth setting out plainly. To apply, you need to be a UK resident aged between 18 and 77². That is an application rule, and it is the reason a new policy is generally not available to someone who has already moved.

For people whose work takes them overseas, there is a narrow route. Legal & General says it may be able to offer cover if you are a member of the UK armed forces, a civil servant, a diplomat or employed in the Merchant Navy, subject to consideration of the risk to personal safety⁹. That is a specific list, not a general expat facility, and it is decided case by case.

The product itself has wide limits. Legal & General's level cover runs to a maximum of £10 million for life cover only, subject to underwriting, over a maximum term of 50 years⁹. Its Family and Personal Income Plan runs to £4 million for life cover only, subject to underwriting⁹. The minimum term is one year¹⁰. Joint policies pay out on the death of the first insured person, at which point the cover stops².

There is no stated time limit for Legal & General policyholders in these facts, so the answer sits in the individual policy documents rather than in a published figure. Where time limits do appear in insurance, they are real: Aegon's Whole of Life policy stops cover if the insured person travels or lives outside the home countries and designated countries for more than 13 weeks at a time in any 12-month period, and cover restarts after 39 continuous weeks back in the home countries. A second Aegon document gives 26 weeks instead of 13, and 26 continuous weeks back. The two documents disagree, and the conflict is not resolved.

Keeping a UK bank account to pay premiums

A life policy that cannot be paid for lapses, and paying from abroad is where many expats come unstuck. The straightforward route is to keep a UK account running. HSBC's own guidance for customers moving overseas says it is advisable to keep your UK account open if you still have income or financial ties in the UK, like a salary, rental income, a pension, payment or bills, and that although you are allowed to keep it, it only makes sense if you will be using the account regularly¹¹.

That is not only about insurance. A UK bank account is the thread that keeps several things working. NS&I says that if you have a UK bank account, you may still be able to save with it¹². The State Pension can be paid into a UK bank or building society account, or a bank in the country where you live, paid in local currency¹³. A Lifetime ISA is different: to open and continue to pay into one you must be resident in the UK¹⁴. So the account is useful for some products and irrelevant to others.

There is a history here worth knowing. Thousands of UK expats living in the EU received letters from their UK bank to say their bank accounts and credit cards would be closed as a result of Brexit¹⁵, and Lloyds Banking Group told customers living in the EU that their bank and credit card accounts would be terminated at the end of the year¹⁶. Account closures for expats are not hypothetical, which is why the account and the policy should be checked together rather than separately.

If you are opening or replacing an account, many accounts aimed at British expats are held in the Channel Islands, which includes international accounts offered by Barclays, Lloyds, NatWest and Santander¹⁷. Those are separate from your old high street account, and the terms differ.

UK policy or expat cover: how each one behaves

The two routes are not versions of the same thing. A UK policy is a contract you already hold, priced when you were younger and possibly in better health, and its continuation depends on the terms and on your ability to keep paying. International cover is a new contract, underwritten where you now live, and it is designed around the fact that you are not in the UK.

The tax line is the one people miss. Normally gains on foreign life insurance policies, unlike gains on UK policies, do not attract a non-repayable basic rate tax credit⁴. That does not make a foreign policy wrong, but it changes the arithmetic, and it is a reason to take advice on the tax position rather than assume the two are equivalent.

On the UK side, the shape of the cover matters too. A dual life policy is sometimes called joint life second death insurance, and it is usually used to cover a large inheritance tax bill¹⁸. The main disadvantage of joint life insurance is that you will get only the single payment per policy, even if the worst happens to both policyholders during the term¹⁸. Both policy holders would have the same level of cover under a joint life policy¹⁸. If you are moving abroad and reviewing cover, which of these you hold changes what your family receives and when.

Where keeping a UK policy may not work

Several things can break the arrangement, and they are worth checking before you go rather than after.

• Residency conditions. Most UK insurers can only offer cover to customers who are resident in the UK¹, and Legal & General requires UK residency to apply². A policy that continues is not the same as a policy that can be extended, increased or replaced.
• Time limits abroad. Some contracts stop cover after a set period outside the home countries. Aegon's Whole of Life terms set such a limit, and the two versions of those terms disagree, giving 13 weeks and 26 weeks in any 12-month period.
• Hazardous locations. Working overseas in hazardous territories is often declined by insurers; an engineer in Ukraine may have difficulty securing life insurance¹⁹.
• Payment failure. If the account paying the premium closes, the policy is at risk. TSB pays claims as a lump sum in British pounds to a bank account in the UK, and the cost of arranging payment to a non-UK account is borne by the recipient³.
• Repatriation. Life insurance policies usually do not pay for the cost of bringing your body back to your home country¹. Travel insurance commonly covers repatriation, but foreign travel insurance is not intended to cover you if you live abroad permanently²⁰.
• Wills and foreign assets. A will made in the UK may not deal with assets in a different country in the way that you wish²¹, and some countries have different laws to the UK, so your will may not be automatically valid in those places²².

There is also a wider set of things that change when you move, which sit alongside the policy rather than inside it. You need to tell the relevant benefits offices that deal with your benefits that you are moving abroad²⁰, contact your local council and give them a forwarding address²⁰, and you may not be entitled to free medical treatment in the UK if you move abroad permanently²⁰. You usually have to send a Self Assessment tax return if you live abroad and you rent out property in the UK, have taxable savings interest from UK banks or building societies, have a pension outside the UK and were UK resident in one of the 5 previous tax years, or have any other untaxed UK income¹⁴. The State Pension is only uprated if you live in the UK, the European Economic Area, Gibraltar, Switzerland, or certain countries with a social security agreement with the UK, including the United States²³, and if you choose to have it paid into an overseas account you will get paid in the local currency, so the amount you get may change depending on the exchange rate²⁴.

A UK policy can run for years after a move; the conditions are tested when a claim is made.

If a claim is refused

A refusal is not the end of the process. The Financial Ombudsman Service looks at complaints about investments and savings endowments²⁵, and at mis-sold travel insurance²⁶. Where a customer would have bought a different policy that would have covered their claim, the ombudsman says it would ask the insurer to pay the claim²⁶. That is a remedy aimed at the sale, not at the wording, and it shows how the service approaches these cases.

There is a worked example of how far a complaint can reach. In a whole-of-life policy complaint, the ombudsman upheld the complaint and told the bank to calculate how much the customer would have paid in premiums if he had taken out a 10-year term-assurance policy, and to pay the difference²⁷. The remedy was the difference in cost, not the sum assured.

For a seller based outside the UK, the route is different. The seller's terms and conditions set out how to complain²⁸, and many websites have their own complaints procedure or dispute resolution service²⁸. Citizens Advice can help with an ongoing consumer problem²⁸. If you are claiming on someone else's policy, the family member or friend's employer can say more about whether they had life insurance and how to make a claim²⁹.

One structural point sits behind all of this. There is no right to cancel a non-distance contract that is a life policy or a pension contract, and the exemptions include contracts for a term of six months or less, contracts effected by trustees or employers, and cases where the consumer is habitually resident outside the UK and not present in the UK at the time of signing³⁰. Cooling-off rights are not a reliable exit once you are abroad.