Financial protection when living overseas: a short guide

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, they are subject to change and we are not responsible for any errors or omissions.

In the excitement of moving (or retiring) to a place like Spain, it is easy for British expats to overlook the key “What if?” questions. Yet identifying what could go wrong – and laying out a financial protection plan – could be crucial to safeguard your wealth and lifestyle.

In this guide, our financial planners here at Scottsdale, Murcia explain some of the key “pillars” that UK expats should consider for their protection plan. We hope this content is helpful. If you want to discuss your financial plan with us, please get in touch to arrange a no-obligation financial consultation, at our expense:

+34 966 460 407


What is financial protection for expats?

Financial protection is typically thought of as an insurance policy that helps to provide a lump sum – or replacement income – in a catastrophic event. However, more broadly, financial protection can describe any plan, or measure, that you use to help maintain financial stability should you fall upon hard times.

In the UK, a range of financial protection products are readily available for many people. These include life insurance, critical illness cover, income protection and private medical insurance (PMI). For expats, however, it can be more challenging to find the cover you need.

This is because local financial firms may not offer the security you need. Or, UK-based firms might not cover you in your new country of residence. Working with an expat financial adviser, however, can open more options for you.


Emergency fund – the first protection layer

In the UK, financial advisers often suggest building 3-6 months’ worth of living costs in easy-access savings to help buttress your finances in an emergency (e.g. losing your job). For an expat, however, the stakes could be higher due to the nature of living abroad.

For instance, perhaps a relative in the UK dies and you need to book an expensive flight at short notice to return for the funeral. Or, perhaps you have a rental property back home (e.g. a buy to let) which suddenly needs major repair work. Maybe your vehicle gets stolen or damaged in your new country and you need to pay out a hefty excess on the insurance claim.

Having an emergency fund means you are ready for situations like this, reducing the temptation to turn to credit. Choose your bank carefully, as you do not want to be in a situation where you cannot withdraw the money easily – or, in the right currency!


The next level – life insurance

What would happen to your loved ones if you suddenly died? It’s an unpleasant question, but important to think about if you have people who depend on you financially. A lump sum from a life insurance policy could be vital to help them navigate the subsequent months of grief.

If you have an existing life insurance policy, then make sure it is still up to date. For instance, following Brexit, the UK left the EU’s formal economic structures and became a “third country”. So, UK expats residing in Spain may need to check the validity of their existing policy if they have had it before February 2020.

Those with a property back in the UK – such as a buy to let – will need to pay particular attention to life insurance. Around 40% of British homeowners do not have life insurance, often due to misunderstandings or worries about affordability. Yet your property could be repossessed if you die and your estate cannot settle the outstanding mortgage debt.


Financial protection and your health

Here in Murcia, our financial advisers often point out to UK expats that they can apply to join the public health insurance scheme (the Convenio Especial) if they have lived here for one year. If you live in Spain for over 3 months, then you will need to prove that you have healthcare cover before you apply for a visa or residency. 

This can be done in three main ways – social security contributions as an employee, private insurance or paying voluntary contributions (to the CE). If you are a pensioner, then you might be able to transfer your right to free NHS healthcare to Spain.

Whilst Spain requires that every resident has health insurance, the amount of cover (and the cost) depends on the provider, your health and other factors. Other countries where British expats live may have different rules about health insurance. Make sure you research the local system thoroughly, ahead of time, to understand your options.

For instance, in Spain British expats can choose to pay a monthly premium, the Convenio Especial which allows them to use public clinics and hospitals and provides full access to the national health service as an alternative to private health insurance.


Conclusion & invitation

If you are interested in discussing your own financial plan or investment strategy with us, please get in touch to arrange a no-commitment financial consultation at our expense:

+34 966 460 407

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