Moving abroad as an American opens up a world of opportunity, but also a variety of financial questions. How do you protect your income? What happens to your retirement accounts? Will your US health insurance still cover you? And what about life insurance and estate planning?
When you move overseas, your financial responsibilities don’t stop at the border. In fact, your financial planning typically gets more complex. Insurance, taxes, investing, and long-term planning all take on new elements when you’re outside the US.
In this article, we provide an overview of what US expats need to know about insurance as an American living abroad.
Health insurance for expats
Healthcare might be cheaper or even free overseas in your new country of residence, but that doesn’t mean you should go without insurance.
Depending on where you live and how long you plan to stay, your options may include:
● Local national healthcare systems: Many countries offer access through residency or employment. These can be affordable but often come with wait times or coverage gaps.
● Local private healthcare: worth looking into and may be required under your visa conditions. They won’t repatriate to the US in case of emergency, though.
● International private insurance: Designed for expats, these plans offer more flexibility, better facilities, and the option to get treated in multiple countries. Good for frequent travelers or those without residency.
● US-based plans: These typically won’t cover routine care abroad, though they may help in emergencies during short visits. Don’t assume your ACA plan or employer coverage travels with you, as it probably doesn’t.
Look closely at what’s actually covered. Some plans exclude pre-existing conditions, mental health care, or pregnancy, while others won’t cover medical evacuation or repatriation.
Beware insurance-based foreign investments
One of the most common mistakes Americans make abroad is buying investment products from local financial advisors that are wrapped in life insurance policies. These are common in Europe, the Middle East, and Asia, marketed as “tax-efficient” or “guaranteed return” solutions.
However, these products often fall into a nasty US tax category known as Passive Foreign Investment Companies (PFICs).
PFICs come with harsh tax treatment (you could owe US tax every year on income you never even received). PFICs also mean filing Form 8621 annually, and missing PFIC filing can lead to steep penalties.
The solution is simple: stay away from foreign insurance-wrapped investment products, as well as foreign mutual funds and some foreign pension plans. They’re rarely designed for US citizens, and they almost always create problems.
Life insurance for expats
The first question to ask isn’t which life insurance policy to buy, but whether you need one.
● You probably need life insurance if you’re working abroad and have a spouse, kids, or anyone who depends on your income.
● You probably don’t need it if you’re single, financially independent, or already retired with no dependents.
If you do need coverage, term life insurance is usually a good option. Getting term insurance as an expat can be tricky, however, as most US insurers require you to be in the US to apply. If you’re planning a visit back, schedule your application and medical exam while you’re stateside.
Be cautious with foreign life insurance policies, as they may not be regulated to the same standards, so the payout process could be difficult or slow.
Income protection
If you’re employed overseas, US income protection policies often won’t cover you.
Look for an expat-friendly disability policy that offers “own occupation” coverage and international portability. These aren’t always easy to find, and you may need to apply before leaving the US. If you have an employer plan, check the fine print to see if it still covers you overseas.
Life, death, and paperwork: Where estate planning and insurance meet
Part of estate planning is how your insurance and financial accounts transfer when you’re gone.
For example:
● Life insurance proceeds might become part of your taxable estate, depending on how the policy is owned.
● Beneficiary designations on retirement accounts or insurance policies may conflict with foreign inheritance laws.
● Powers of attorney and health directives drafted in one country might not be valid in another.
US citizens are always subject to US estate and gift tax rules, even if they live abroad. If your estate exceeds the current exemption ($13.99 million in 2025), that could mean a large tax bill. Some countries also impose their own inheritance taxes or forced heirship rules.
If you’ve got assets or accounts in multiple countries, or family spread across borders, proper estate planning becomes essential. Work with an attorney who understands both US and local law. You may need a US will, a foreign will, or even a trust that works across jurisdictions.
In short, insurance and estate planning work hand in hand to protect your wealth and your loved ones. Don’t leave it to chance.
Should you keep one foot in the US financial system?
Even if you plan to live abroad long term, cutting ties with the US financial system isn’t normally advisable.
Maintaining US-based accounts and insurance policies can be helpful, though check with the institutions where you have accounts to see if they’re able to have overseas clients. Advantages include:
● Keeping your US credit score active.
● Accessing US investment platforms that are happy to have overseas clients.
● Avoiding higher fees or restrictions on accounts held abroad.
It also helps to maintain a US phone number for authentication, if possible.
What about long-term care insurance?
US-based long-term care (LTC) insurance typically won’t cover services received abroad. That might seem like a reason to ignore it, especially since many countries offer more affordable care options.
However, if you’re unsure where you’ll spend your later years, or if you might return to the US, LTC coverage could still be relevant. Consider hybrid life-LTC policies that offer flexible benefit use, or self-fund through retirement savings if you’re aging in a lower-cost country.
Insurance considerations for US expats
Financial planning for Americans abroad is complex. Insurance, taxes, investments, and estate planning all become more complicated once you leave the US.
You don’t need a perfect plan, you just need one that works across borders, protects your health, income and assets, and is aligned with US laws and local laws.
Seek advice from an expat specialist financial planner, who will recommend insurance and investment strategies depending on your situation. The right advice can help you stay covered, compliant, and confident, no matter where in the world life takes you.
If you have any questions about your situation or require assistance managing your investments as an American living abroad, get in touch.
This article is for informational purposes only; it is not intended to offer advice or guidance on legal, tax, or investment matters. Such advice can be given only with full understanding of a person’s specific situation.
