Moving to the US with Kids? What British Parents Should Know About Term Life Insurance
If your family is moving to the US, sorting out term life insurance is worth adding to your settling-in list. It covers you for a set number of years and pays your family a lump sum if you die during that time, which can help with the mortgage, bills and childcare. It’s also worth checking whether any UK cover you already have will still apply once you’ve moved.
Moving abroad with children is a huge undertaking. There are school places to find, bank accounts to open, a new healthcare system to get your head around, and a long list of forms that all seem to want a document you packed in a box somewhere. Life insurance isn’t the most exciting item on that list, so it tends to get pushed to the bottom. But if someone in the family relies on your income, or on everything you do at home, it’s one of the more important things to get right.
Will my UK life insurance still cover me in the US?
It depends on your policy, so the first step is to ask your UK insurer before you go. Some policies have conditions about where you live, and you may need to tell them about the move. Get the answer in writing if you can, so you know exactly where you stand.
If it’s been a while since you looked at your cover, MoneyHelper, the free government-backed guidance service, has a clear guide to how life insurance works that’s a good refresher before you start comparing.
Even if your UK cover does carry over, it’s worth thinking about whether it still fits. Your costs, your mortgage and your plans for the children may all look quite different once you’re living in another country.
How does term cover work in the US?
The basic idea will feel familiar. You choose two things: how long the cover lasts (the term) and how much it pays out (the coverage amount, which Americans often call the death benefit). If you die during the term, your family receives that amount as one lump sum. If you outlive the term, the cover simply ends.
The main difference is that you’ll usually be buying from a US insurer, in dollars, and they’ll ask questions about your health and circumstances as part of the application. Once you’re settled, for example, you can apply for a term life insurance policy online through Fabric by Gerber Life. It offers 10, 15, 20, 25 or 30-year terms with coverage from $100,000 to $5,000,000, and it’s open to adults aged 21 to 70. Your price is set when you buy and doesn’t go up for the life of the policy as long as you keep paying your premiums.
Fabric’s policies are sold in the US, so this is one for families who are living there rather than planning a long holiday. If you’ve only just arrived, check the eligibility questions carefully before you apply.
Who in the family needs cover?
Anyone who has someone depending on them financially. When you’re relocating, that can include people you might not immediately think of:
- The parent whose job prompted the move: If the family’s new life depends on that salary, cover can help replace it if the worst happens.
- The parent who isn’t working in the US: Plenty of families move with one parent stepping back from paid work for a while. If that parent handles the school runs, the homework help and everything else, the family would need to pay for a lot of support without them.
- Parents with a mortgage or a long lease: A payout can help your family stay in their home, or give them the breathing room to decide whether to stay in the US or come back to the UK.
How much cover do we need, and for how long?
There’s no perfect number, but it helps to add up what your family would need to keep going without you:
- The mortgage or rent
- Everyday bills, childcare and school costs
- Bigger future costs, like university, whether that’s in the US or back home
- The cost of moving home to the UK, if that’s what your family would want
Many families choose a term that lasts until their youngest has finished school or university, or until the mortgage is paid off. Pricing depends on things like your age, your health, how much cover you choose and how long the term is, so it’s worth getting a quote rather than guessing.
The US terminology can take a bit of getting used to. The NAIC, the organisation of US state insurance regulators, has a straightforward consumer guide to life insurance and annuities that explains the jargon, and it isn’t selling anything.
A quick checklist before you apply
- Check your UK cover first: Find out whether it continues after you move, and what happens to it if you take out a US policy too.
- Look at the insurer’s financial strength: In the US, agencies such as A.M. Best rate how well insurers can meet their obligations. Fabric’s term policies, for example, are issued by Western-Southern Life Assurance Company, which A.M. Best rates “A+” (Superior). Ratings can change, so check the current one.
- Make sure the price is locked in: Your premium shouldn’t go up during the term as long as you pay on time.
- Look for a money-back window: Fabric’s term cover comes with a 30-day money-back guarantee, which gives you time to read everything properly.
- Think about your beneficiaries: Decide who should receive the payout, and keep your details up to date if your plans change.
One less thing to worry about
A big move is exciting and exhausting in equal measure, and nobody wants to spend their first few weeks in a new country thinking about the worst-case scenario. But it’s one of those jobs that feels much better once it’s done. Once the boxes are unpacked and the school run has settled into a routine, set aside an evening to check your UK cover, work out what your family would need, and get a quote.
Have you moved abroad with children, or are you thinking about it? What was the one bit of admin you wish you’d sorted sooner?
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