Kathryn (00:05):

Hi everybody. We are on season eight, episode three and today I have Matt Ram back with me for the first time this season. Hi Matt. How are you doing?

Matt (00:14):

Good morning. Very, very well. I’m glad to be back. It feels a bit like the summer break in football actually doesn’t it? For the next season and I’m very glad to say of course that my beloved football team is already top of the premiership but less of that.

Kathryn (00:31):

Well I was going to say, I would have absolutely no idea what that team is because we know that I do the football side well. I’ve been enjoying the rugby being on. I’m glad that that’s been enjoying that.

Matt (00:41):

I watched the England Argentina match with when I closed really because particularly after the sending off in the first few minutes I thought, oh no, here we go again. But they did really well so that’s good. It was a good start.

Kathryn (00:53):

Absolutely, absolutely. Well everybody today we haven’t be talking about insurance for expats or people that are potentially spending quite a bit of time abroad each year. This is the Practical Protection Podcast.

(01:22):

So Matt, obviously I know things are very different between whether or not we have somebody who is obviously living completely and is residence abroad and then we have different options for people who maybe, I dunno, maybe working on contracts that work that take them out of the UK for like half a year or so. But why is it we basically have, we have UK insurers and we have international insurers that we would typically potentially reach out to as a UK based advisor and there’s only a couple of UK insurers that are prepared to consider ensuring somebody who is either an expat or they are out of the country and quite a bit. And I think at the moment, in my mind I’m thinking quite a lot along the lines of the life and kick side of things, IP does bring in that extra dynamic because of the UK taxpayers and all that kind of thing. I was going to say, for anybody who’s listening, we’re not going to go as in depth as what needs to be gone into in terms of things like income protection for somebody in this situation it becomes very, very complicated but doable at times. But why is it Matt that we do sometimes? Why do we only have a couple of insurers that prepare to consider people who are outside of the uk?

Matt (02:30):

Okay, it’s a very good question. I think just to clarify what we’re talking about here is British nationals or at least I’ll be focusing in on British nationals and one of the key points here is whether an insurer has got a license to trade in another country.

(02:56):

So particularly one of the big insurers, which one of the two has actually gone out and looked for, gone to other industry bodies in other countries, particularly in Europe and the far East and actually obtained licenses to trade. So that’s pretty important. A lot of insurers just, I don’t think cannot be bothered is the right phrase, but commercially they just don’t see the markets, the foreign markets as being particularly profitable for them so they don’t bother, they will really stay in the UK trade in the UK or of course question that I’m sure you’ll be asked Katherine, bear in mind what you do for living is what about the channel islands and the Isle of Man and things like that. And of course most insurers always worth checking will write business from people or entities, corporate entities that are a resident in those countries. But effectively why can’t we do somebody in France?

(04:12):

Why can’t we do somebody in Belgium? Why can’t we do somebody in Italy? It primarily comes because simply that insurer does not have license to trade in those areas and therefore it’s from an underwriting perspective. And what I mean by underwriting in this context is a risk management to effectively look at if there’s any extra risk being brought in to the UK portfolio. If you had Belgians, Italians, French, it would make absolutely no difference whatsoever. The mortality in these countries is very similar to the uk. It might be slightly different shapes and they might be at the end of the day with the Mediterranean countries because of their diets they might do better in some medical disorders such as heart attack and things like that, maybe the general UK population but generally overall it’s very, very similar. So from an underwriting, a pure underwriting aspect, a lot of these countries are absolutely fine but it is and I think when we scratch their head, sorry, distributors scratch their head and think well why the earth, somebody in France gone and this is a national of France, I would say why can’t we do it and instead license to trade that causes the problem.

(05:44):

The key point that I would immediately say is the owner of the policy so we then get into life of another policies are they resident in the uk? Alright, now a couple of scenarios there which again some distributors might not come across is particularly key person insurance whereby as long as the person, sorry, the entity, corporate entity in this case key person is in the UK and they have employees in the far east, the US Europe, then those can be insured. Now we are looking again here at the legal tax situation when I say they can be insured, you’ll then have the overlay of quite where those people are and I did mention those countries specifically because they are places whereby we don’t see any actual additional risk. However, if you are looking at somebody, a company in the uk, which Russia is not a good example to use at the moment but let’s say in one of the more, how can I put it, one of the areas let’s say in the Middle East, which is particularly act war still or either externally or internally. So civil war, then the underwriter will step in if you like and say sorry, no Cando now guide there into the underwriting view on no cando is for advisors to look at the FCDO, which in my day anyway it used to be the foreign commonwealth office, it’s now the foreign commonwealth and development office and it’d be good just to look at what the travel situation is there and if they say it is not advisable then you are likely to get no can-do from the insurance community than the underwriting insurance community.

Kathryn (08:11):

So they’re very quick to react as well. The underwriters as an example, obviously when everything happened, I think I know you said before about Russia but obviously with everything that happened in Russia and Ukraine there was a very, very quick reaction to start to be the questions changed in the protection insurance application specifically ask, have you been there for a long time in the last few years? Do you intend to go there? Just obviously because of the fact that there is such a higher level of conflict there at the moment, but then you can have quite some longstanding areas as well. I’m trying to support somebody at the moment who’s due to go to Haiti for a week and the majority of insurers 99% are absolutely, they just won’t even consider it. It’s immediate. That is it. So like you were saying looking at I called the FCO but the FCDO system, just to give an idea, if it’s a country that is outside of America, Europe, New Zealand, Australia, it’s a good idea just to have a look and go, right? Is there anything there and just see if you potentially envisage that there’s going to be a potential issue when you put the application forward.

Matt (09:19):

I totally agree. I mean certainly when my reinsurance days we were as part of our job almost we were encouraged to look at the FCO website, FCDO website and also just as simple as things, read the newspaper and look at the news and from a reinsurance perspective in those days it was right onto the phone in the morning with the insurers and immediately say to them, I’m afraid x, Y, Z country is out for the time being and we wouldn’t be wanting to accept any business from any insurer who decides they want to write it for themselves. So yeah, they do react very, very quickly and I say as part of the underwriting remit really to react quickly and keep abreast of the situation worldwide. So as I say, I hope I haven’t confused the listeners with the expat Britt and a national there, but the same applies in terms of the underwriting part of this conversation. If you have a Britt living in Ukraine or Russia at the moment as examples just from recent examples, then they would not get cover. An interesting one would be a Russian resident in the uk

Kathryn (10:57):

That’s very, very tricky still at

Matt (10:59):

The moment. That is a very tricky indeed or

Kathryn (11:02):

Anybody with potential connection or previous, so even somebody who’s been, so we were trying to spot somebody who I believe it was one of Allen’s clients so I dunno exactly all of it off the top of my head but I believe that they were Ukrainian but had worked and not lived in Russia at all anything like that, but they had been employed by a Russian company for quite a long time in the past and the cover was not available with the majority of insurers because of that connection at the moment to Russia.

Matt (11:39):

Yes, I’ve seen quite a few would be exaggerating but a good number of cases that have come across that chat, sorry that decision, the American reinsurers are particularly hot on that particular topic. Perhaps not surprisingly the European ones seemed were a little bit more, little bit more open but it’s quite staggering about how far of the insurance food chain those types of decisions go.

Kathryn (12:23):

I can imagine. Sorry I was going to say as an advisor as well, ideally what you should have is some form of UK sanctions checks for your clients. Ideally it would be automatically integrated into your system so that you don’t necessarily have to go out and check it all yourself for each client, but if you don’t have an automatic system that’s doing a UK sanctions check, you should be doing that on all of your clients and sometimes I have to say you get really bizarre things where somebody can suddenly flag up as this person’s potentially on the list and it’ll be that they’re like a mayor in America or something and it’s just a random name sort of connection and age connection and it’s absolutely fine. We’re just going back to side of things in terms of why insurers maybe do and don’t want to insure people outside the uk.

(13:13):

So the ones that the UK insurers where they can potentially do it, it is where they feel that there’s maybe a UK liability. So when we’re talking about the UK liabilities, we are talking about mortgages in the uk we’re potentially talking about core family in the UK who are dependent upon them. So quite a good example that we have would be somebody who is working in the Middle East or potentially offshore outside the country quite a bit and they are the main breadwinner but then they’ve got a partner and children in the UK so can potentially look at some family protection there and when you’re calculating things like that as an advisor you are going to be looking, usually it’s maybe some kind of multiples of salary until age of independence or retirement age or it might be that you’re looking at family income benefits to certain timeframes as well, but it’s not just that you can sometimes take into account on top of that so if there is children involved you can maybe go right, well actually if these children were to go to university we expect it to cost this much over this many years.

(14:15):

So we’re going to include that in the, some assure you might even at times want to take into account if a family member is dependent upon the person for care home fees or different things like that, you might want to also include some kind of value in some assures to cover those ongoing care home fees as well if anything happens to them. But obviously I wondered if as you said, the mortality and morbidity rates in the majority of countries that people quite often would go to are probably very, very similar to the UK and the ones that aren’t are probably the ones where we are probably thinking they’d probably stand out a bit more and you’d probably think maybe oh that’s a more of an unusual place to maybe go settle and that’s fine. But in terms of the way that it works as well though because I’m sure that with some of them as well, even if we can sometimes do the insurances in the UK market, are there certain things sometimes that you’re aware of whether there’s some showed, if I was insuring an expat for, I dunno, 500,000 pounds, that could be potentially acceptable maybe even at standard rates with an insurer, UK insurer.

(15:26):

But if we’re starting to go into, I dunno if we’re going into million circuits of high net worth clients or going into the million side of things, I’m sure I’ve experienced it before but maybe it’s changed now where as soon as we hit certain some shoulds it suddenly became per mill ratings just purely because of the fact that it was a highest sum assure.

Matt (15:46):

Interesting question to answer that one directly, I have not seen it change on basis of some assure that’s

Kathryn (15:57):

Interesting because I’ve got backend challenge.

Matt (16:00):

Well if it’s just the sum assured then I can only, I’ve not seen it so from a practical perspective I’ve not seen it now then I put my technical hat on if you want then it wouldn’t altogether surprise me that when I think high net worth I tend to think well maybe the reinsurers get involved in it

(16:27):

And it could well be them saying right up to two, 3 million pounds will follow the normal practice of the insurer but once it becomes falls very much into our domain then we’re not going to follow that practice. We are going to impose our own rating if you want loading and that could well be on a peril basis whether it’s peril or whether it’s a years to age or quite however it comes across, they should be similar but some insurers will, sorry, some reinsurers will, I can see it happening Kathryn, let me put it that way. I’ve not seen it myself but I can understand why there is that mix or can be that mix. Absolutely. Did you have a particular example that you could think of or maybe you can remember

Kathryn (17:28):

With that one? I can’t remember absolutely everything with it. I know it was a highest, some should but was nothing there was, there wasn’t like a percentage rating for any kind of risk factors or anything. It was just, I remember being told it’s gone to per mill because of the summer showed but that was I think quite a while ago so it might be that it’s changed keeping with the kind of thing that we’re talking about because I know you’ve mentioned America, there are specific treaties in place which basically mean that it’s not that you can’t advise people in North America if you’re a UK advisor, but you do need to have, it gets very intense, I dunno if you know anything on your side from it Matt, but I do know that I know firms who do provide advice for people in America, but it gets really, really tricky. The solicitors involved, you have to bring in people, you can’t just do it yourself because I think like you saying before, it’s all to do with potentially permissions. I think it’s to do with the way the different financial institutions work. Is that your understanding?

Matt (18:31):

Yeah, you’re absolutely a hundred percent right. It is a very, very complicated field in terms of getting the right permissions and getting the right advice if you have somebody who has paid usually uk, US National obviously, but residents in this country, it’s a complicated field and again, my understanding of this and it is 10 years out of date because I didn’t look at it when I was at Agon in terms of the business opportunity and effectively I suppose you would say the actuaries, the valuation actuaries, the guys who actually do all the nitty gritty of the life insurance funds

(19:25):

And reserving, okay, so I’m not talking about investment here, I’m talking about the reserving on the life protection fund. When they consult their tax lawyers, it is unclear quite what they have to report or not in terms of the legal aspects of the fund itself because obviously the regulatory, the regulations, the people, people that governments the FCAI suppose are very interested in how the reserving is done and how it’s carried out, et cetera, et cetera. When those actuaries have talked to their lawyers, it is not clear where the reporting of the US tax situation comes when it comes into play on a UK fund

(20:29):

That sounds pretty complicated because it is, I can assure you so effectively when it’s not clear, therefore if I go back to any kind of risk, whether it’s an airplane, a house, whatever, when it’s not clear what the risk actually is, then the taxation guys, the actuaries will err on the side of caution and effectively there is a thought that if there was a lot of American nationals buying up life insurance policies, then the UK fund would have to report that and those people and the sums assured on an annual basis to the IRS therefore, and it’s not clear one way or the other where they have to do that, but somebody somewhere has said that might be a possibility, therefore be careful what you wish for type of scenario. And most of the insurers have said, well we’re not going to get into that territory.

(21:40):

The amount of business that we can write is going to be limited anyway because the Americans have a very well developed market themselves. Of course even if they’re over here they can access it as far as I’m aware then it is just not worth the risk and therefore most insurers shy away from Americans nationals who might be resident over here but have in the past had they’ve had dealings with their own the US tax authorities. So it’s one of those scenarios where there’s no absolute black and white answer. Now I can say that depending on how long the American national has been over here, some insurers and the policy is not huge and what I mean by huge possibly is in the region of maybe more than 5 million, maybe a little bit less, but they will provide insurance in the UK on a US national.

(22:47):

I have known them but not for very big sums assured again, I would say how long do they have to be over here and it’s a hit and miss question or sorry, a very hit and miss answer. Sorry to that question and you probably looking at least five to 10 years, what I would say is that, just going back to this, one of the reasons that I see a lot of cases, Kathryn, I don’t think you mentioned please you can’t put your hand up because I can’t actually see you but say yes I did mention it, but one of the big areas certainly over the last 10 years, maybe not quite just at the moment is that IHT on the properties, particularly in London where from folk living abroad and certainly there’s a lot of interest and a lot of very high and assured have been accepted in the uk, but again, you just need to be we or the IFA distributor needs to be very wary of the situation in terms of the fact that most insurers can only write business where the policy owner is in the uk but there are ways around it trusts being the absolute classic. If there’s UK trust that is tasked with settling the I HT liability, then that’s absolutely fine.

Kathryn (24:28):

Absolutely.

Matt (24:30):

I’m talking big sums as you would here by the way, 5,000 million type thing.

Kathryn (24:35):

Insane. That is really insane isn’t it? Especially, I was going to say if someone’s gone IHT liability a hundred million, the actual value of their estate to me is just insane.

Matt (24:49):

I think. Yeah, to be fair, yeah, biggest one I’ve ever done is hundred 48.

Kathryn (24:59):

Oh wow, that’s such a brag.

Matt (25:03):

That was UK IHT liability. That’s incredible. They do happen and that was a good number of years ago now by the way, not so Yeah, they do come up I have to say.

Kathryn (25:15):

Well definitely and obviously there are some advisors who work purely in that space and then there’s times that’s just, you might just come across it and I think it’s important as well for advisors is that if you are a protection only advisor and you are approached by somebody for I HT planning, it is always a good idea to potentially have an IFA to hand that you trust who can maybe give them support if they don’t already have one themselves and if for whatever reason you do speak to somebody they’re wanting I HT planning, they’re telling you that they’re state value and you’re like actually yes they really do need I ht planning, but they’re not engaging with an IFA, they’re not really wanting to go into too much information with you obviously speak to your compliance person, but it might be that your compliance says, well you can’t do it without more information.

(26:00):

Or they might say you can do it, but then what you just need to do is make sure you put some disclaimers in your recommendation and your advice to say as you protection or if you’re protection mortgage only or anything like that, just say, I’ve done this based upon what you have told me, based upon your calculations I have advised that you need to speak to a full IFA, I’ve given you some details of somebody who’s really useful in this area because whilst I have done this based upon your calculations, I cannot confirm that it’s going to meet your exact needs. I’m always thinking about the way of having to just be really, really careful as an advisor. If you’re speaking to somebody who needs 148 million like Matt has of I HT cover, I think without a shadow of a doubt they will have an IFA that’s not an issue.

(26:47):

But you do still sometimes find that people who maybe do have IT liabilities and there may be sort of like 5 million or less that sometimes they are still just doing it themselves because I think a key thing to remember as well is that with quite a lot of people, it doesn’t take too much to actually get pushed up into IHT now. So if you’ve got a married couple and they can get some allowance for the residential property. Best case scenario if a married couple ideally who isn’t engaging with advisor, having all that kind of support their allowance before IHT is a million pounds and for someone who single it’d be 500,000 or even cohabiting, that’s a big thing to remember as well. Cohabiting, we’ve not got that, we’re not merging them together to make the million, it’s 500 each at the moment based upon the current rules of when we’re recording, which is towards the end of 2023 and is just really important that to think if you think about the property values, especially in London area or any main city, people can have bought things that were nowhere near IHT value.

(27:52):

We could be talking 20, 30 years ago for some people and they’re now suddenly there and they might not even realize it. So you could be speaking to some. So when you do speak to people, again, if you’re a mortgage advisor you’ll probably know the value of the property but make sure if there’s any other assets there. If you’re protection only if someone says to you, well I’ve got a mortgage of this, you can go ahead but then maybe just check with ’em as well, but what’s the value of the property? Because if you’re took something like an equity release mortgage or anything like that, we could be talking, well for equity release we need to be doing something anyway just to really protect the estates but people can go there and into that higher level without realizing we’re gone. A bit of an off tangent there, haven’t we Matt, in terms of stuff like that, but it is really relevant in terms of the expats or people who are foreign nationals insuring here.

Matt (28:38):

No, no absolutely. I think in my experience, if you like the majority of these high net worth individuals do have corporate lawyers engaged or specialist accountants, tax people. And it’s often those guys because it’s my understanding particularly legal guys is that when they are advising themselves on let’s say IHT, of course their focus will be how to mitigate IHT one way or another, excuse me, it’s frogging my throat, but one of those parts of that recommendation will nearly always include life insurance to mitigate the IOT liability and therefore it’s those guys that will often find an IFA for that particular client. Absolutely, and I would suggest that even at relatively small sums assured if somebody’s earning 150,000 a year, 200,000 a year, 300,000 a year, then they’re likely to have an accountant, which by the way can be the source that you can use to justify it financially.

Kathryn (29:53):

That’s really

Matt (29:54):

Interesting in your recommendation or to the underwriters at the end of the day, it’s

Kathryn (29:57):

Really interesting. So we speak to quite a lot of people who are a hundred k plus and they don’t have accountants or anything like that.

Matt (30:05):

Yeah,

Kathryn (30:07):

It can be so tricky and I think it’s because as with anything we all, the client market is so varied, it’s so completely varied and that’s why it’s important as well as an advisor to make sure that we have those trusted connections. We talk a lot about signpost into protection specialists. It’s essential that we can potentially signpost out as well whether or not that is mortgages, pensions, investments, cashflow planning, anything like that has touched someone needs. Wills are a really big one as well. The amount of people who don’t have wills, especially cohabiting tell me. So it’s making sure that we say to people, I’ll say to people, I’m like, I do not do a will. That’s not what I do. I don’t do lasting powers of attorney either. They’re both really, really important. It’s not what I do. I can see that there is a need for it.

(30:53):

I would really suggest that you speak to this firm. I don’t share the client’s details with anybody, wouldn’t do it that way. But I give the people the information to then do what’s right for them and what they feel is right. And I think from a consumer duty point of view as well, so this is an extra thing for anybody working at our industry as an advice when it comes to things like consumer duty, you should have that ability to spot where there’s in a sense a bit of a flaw or a hole in the client’s planning or their circumstances in terms of the financial security for them, their family and turn around and go, you know what, this isn’t what I do but these people can. And I think sometimes people can be a little bit reserved or they used to be really reserved of like, oh well is this person going to now try and steal my client? Are they going to undo everything I’ve done? But there is a massive, massive network of people and I think the majority of people in our industry work for the better good. And they work for the better hundred clients and as well they don’t want to have bad reputations of doing some on over and doing the clients

Matt (31:56):

And all this kind of thing. Oh god no.

Kathryn (31:58):

So the majority of the time you can build incredible relationships. I know we’ve had a really, really good nat here, so Matt, I’m going to chat to you now about, we’ve mentioned Russia as an area where at the moment as say we’re September, 2023, this podcast will probably going out in October. So at the moment Russia will be somewhere where there will be significant difficulty in arranging insurance for somebody same potentially for Ukraine at the moment. Just depends upon the situation, it depends upon the insurer’s question sets, but most of them will now ask about Ukraine and I mentioned before about Haiti Haiti’s one where I say almost all insurers have just been immediate. No, it’s just complete shutdown, not going to happen. Are there any other countries that kind of stand out to you, Matt, as sort of somewhere where maybe even historically there’s been issues or I’m not saying not this is a criticism of the country in the slightest that’s not the case, but it’s just a sort of case of this is where we have seen conflict quite a bit so we’re seeing it now and it might just need that little bit more research to find something.

Matt (33:09):

Yeah, you touched on some key areas there. I mean where you can actually have parts of countries as well, which insurers won’t touch. Yes.

(33:22):

The ones that are immediately spring to mind where you’re going to find it difficult to place businesses, Iran, Iraq, Syria, you’re going to find Yemen. These places I don’t think will be of any surprise. I hope to anybody listening, certainly Haiti you’ve mentioned you’re not going to get covered really in the eastern side of Africa. There’s just too much of what we as well. Certainly my reinsurance days were called riots and civil commotion, which I shouldn’t laugh to be perfectly honest because they’re very, very nasty. But you only have to have a look at some places in Somalia. If you look at some of the countries in Central Africa that are being run by effectively mercenaries from foreign countries, then you’re just not going to get cover there. Some of the South American countries, you’re going to find it pretty damn difficult. I would say that if you are looking dipping back right over the ocean and going back to Middle East again, then you’re going to find it probably difficult. And this one always brings it home to me really areas, in fact the southern border of Turkey, which is with Kurdistan, you’re going to find it difficult. There cases I’ve been involved with fairly recently, the insurers obviously with the reinsurers in the background are not great. They’re not that keen on Israel

(35:05):

Parts of Israel. Therefore the questions that I asked is exactly where in Israel was going to travel to.

Kathryn (35:16):

Yes.

Matt (35:17):

You then get into, now I’m not entirely sure how many insurers actually take into account, but there’s a risk manager myself. There’s always a difference between somebody going somewhere for the first time and not really understanding. So this is travel, it’s supposed to more residents, you’re not really understanding terrain as to say somebody who is now a resident in the UK but going back to a country which has problems, not necessarily like

Kathryn (35:48):

Family visits going on

Matt (35:50):

Holiday, it’s because they know but they should be less of a risk. They will know where not to go if you know what I mean, as will the family tell them if things have changed, do not go there or do not go here. It’s a minefield. You go to New York or Los Angeles and the hotel says don’t go right because you could well be mugged or something like that. It’s quite a difficult field, it has to be said. But

Kathryn (36:24):

I was going to say another thing just to add to people there and you sent about the questions and about the locations because quite a few of the places that you have mentioned are places that we’ve insured people

(36:33):

And it can often come down to location, but what can be really useful as well is to say to people when it’s like that because often it can be in certain countries, it can be due with private security, offshore workers, things like that. And what we’re going to be doing is saying things like, so where is it that you land? And really specifically sometimes it’d be a case of are you on a military base, are you in a specific private security compound when you’re staying there, how do you travel if you’re getting there by plane, how do you travel from the plane to wherever you are going? Sometimes it can be is it armored vehicles? Are you going straight to if it’s an offshore person, are you going straight to the rig or to the boats? Things like that.

(37:16):

And yeah, there’s a lot of questions to ask and things like that. And obviously I have to say that in terms of establishing if we really need to consider somebody as an expat or outside quite a lot, it does tend to come down to obviously the amount of days outside of the country depending upon the issue of questions. But they are going to be asking things like do you have a UK gp? Are you it sometimes on some of them, if they’re not a UK taxpayer, that can sometimes really, really complicate things as well because then that does start to question, well if you’re not paying tax here, are you resident here? Sometimes maybe even the currency that they’re paid in can sometimes come into it. So there is a lot, lot of things to know when we’re looking at this kind of stuff Matt, how would it change? So I think with life and critical illness cover, I think we’re probably quite standard in the sense of if we are going abroad then they’re probably, especially in the areas that we’re talking about, so like North America, Europe, Australia, New Zealand, they’re not going to be seen as huge concerns on the life and critical illness side of things. But income protection is treated differently, isn’t it?

Matt (38:29):

Yes, very much so. The key challenge, I think there are two elements to this because there’s one from uk people who have bought policies whilst bit in the UK and then go abroad, the claims assessors throughout the industry have often found that it’s been very difficult to manage the claim.

Kathryn (38:58):

Yes,

Matt (38:58):

I can imagine. So you have the initial reason for the claim that generally can be sorted out, but the ongoing handling the claims often the most difficult part and from that, most insurers therefore put in their policy conditions, if not all I’m talking mainstream here will actually say, okay, in the event of a claim we’ll definitely pay you for the first, let’s say 26 weeks. But after that we may we will reconsider. So their point being that if you want to continue, sometimes they will turn around and say, well if you want to continue your claim, you have to come back to the UK so we can manage the claim properly. If not, they may terminate the claim and that’s an essential that is inbuilt into most policy conditions these days for income protection. It can sound a bit hard to be honest with you, but that’s practical experience I suppose to, well it may happen, it may be difficult or it might not be difficult. It’s practical experience of trying to manage ongoing claims abroad has proven that it’s so, so difficult that it’s not a risk that is acceptable to income protection providers. Does that answer your question? Okay.

Kathryn (40:25):

Yeah, I think it does and I think a key thing, so again, whenever we are advising people and it tends to be me or a that tends to do more like the stuff abroad, but just because there’s so many aspects to it and you can potentially go wrong, A really key thing is that we would say is that, well why aren’t you setting, obviously if it’s somebody brand new who doesn’t have income protection in place already. So I’m saying that somebody who’s potentially wanting to go abroad and is already abroad and wanting things like income protect all the life clear, we always start with saying to ’em, so why aren’t you insuring yourself there? Yeah, key

Matt (41:01):

Question.

Kathryn (41:02):

Exactly. It’s like why not? If you are planning, you now live in Germany, you have no intention of coming back, you plan to retire there, live the rest of your life there as an example, why wouldn’t you do a German policy rather than a UK one? And there can be a number of different reasons about that. It can be that you sometimes have people that go, well look, I do live here and I understand German very well, but I don’t understand it enough to feel completely confident. Or it can be that there’s some UK liabilities.

(41:32):

What we would tend to do is say to people, have you spoken to an advisor there and tried to get some advice there and you get a mixture of responses, but again, you would just work with what your compliance says is okay or potentially not okay for you to do. And it’s really, really important to, as with anything, to have a list or check sheet somewhere to go, right, somebody’s outside the uk, they’re wanting us to help the cover, can I satisfy this? I know tick boxes and that computer says no is never great, but we are talking about very technical situations here in terms of the taxation, and I don’t think I actually mentioned this before, did I go into the trust format? Did I say

Matt (42:08):

Anything? No, I think I mentioned it in the context of ihd, but absolutely you far away.

Kathryn (42:14):

Yeah. So you do need to be careful as well if you’re doing trust for people if they’re going to be outside the uk, but also if somebody is in the UK wanting UK insurance, everything’s absolutely as you planned it and you get to do in the trust and they suddenly go, oh well my sibling actually lives in America and I want ’em to be a trustee or potentially even a beneficiary. Any of those situations where the trustee or beneficiaries outside of the uk, you just need to be again on top of it because you need to say to the person, I can do this. In a sense, if you speak to the insurers, the insurers will usually say to you they need to get legal advice and that’s what you’re going to say as well. You’re just going to say you are going to need to get legal advice. Essentially this money is going to be moving outside of uk, the UK finance sector and banking system is going to be going into your country. And you’re going to say, I don’t know, I’m not a specialist, I do not know how, what’s going to happen in terms of the value of that policy and what it will look like once it’s gone out of the UK system. So just make sure you’ve got that kind of understanding and statement yourself. So I’ve got some case studies, Matt, actually

Matt (43:20):

Do we have much time or have I Yeah, no, go for it. I was just going to say, talking about policies going outside this country, I had a very interesting case. Ultimately I don’t think it was ever resolved the question, but this was a case where a chap had a client, sorry, should British National gone to Australia for I don’t know, three or four, five years in his early career, had bought an Australian income protection policy and had come back to the uk, wanted to add a UK policy to the Australian one, and the Australian one had various policy conditions in it. That actually effectively meant that if the UK policy was put in force, then the other one there was a good chance that it had to be canceled and this wasn’t getting over the 75, the limitation of benefit issue. It was quite an interesting scenario, I must admit. I don’t think the, I ultimately got to the bottom of it. So it’s interesting when you’ve got, as I say, you’ve actually got overseas income protection policies actually coming back into the uk. Absolutely. How does that work?

Kathryn (44:43):

Well definitely as an advisor get all the existing policies, information

Matt (44:48):

Particularly on income protection. Absolutely,

Kathryn (44:50):

Yes, definitely. It doesn’t take much for income protection, especially for somebody’s health to have changed even a smallish amount and we’ve got an exclusion hundred percent, so we just need to be really on top of that. Okay.

Matt (45:02):

No, sorry,

Kathryn (45:04):

Definitely. So we’ve got a couple of case studies. So the first one I was just going to do is an international cover one. This I did. So it was for somebody in the early fifties. There were European National and residents in Europe. They had had some family and connection into the uk, different things in that, but essentially there was some UK liability for IHT liability for a certain period of time. Now this was obviously this person was brought to me, it was all done through solicitors and IFA and everything like that who said to me this is what’s needed. This is what their system works like with the UK financial system compared to that country’s system, things like that. International cover does work differently though if anybody is in that space, always wondering how it would work. So in the UK we tend to do do the application.

(45:51):

The insurer might want to go for a medical, they might want some reports from the gp, it might just be accepted straight away. With international cover it’s different because they want a medical very early on then it’s not going to be assessed without a medical. And what they do is it’s obviously in the uk the insurer pays for the medical usually and it’s arranged at a time that suits the person. It’s all done understood in the background. But with international they would usually say, right, you need to actually arrange your own medical and pay for it and then we’ll assess your application. If we’re able to offer you cover, you accept it, we’ll refund you the medical. There are some other times that they can potentially fund the medical too, but there are times that they might not do as well. So we have to be very, very open about that.

(46:32):

The other thing as well with international cover is just to be on top of the fact that there is no financial services compensation scheme to cover them, whereas UK policies are covered by that. Obviously we always want to be covered by the FSCS, but ultimately if the client can’t get covered with a UK insurer then there’s no choice. We’re just going to have to go with what we need to do In terms of the international space. So obviously the UK IHT liability, we have our own compliance procedures at Kiro, which means as to whether or not we couldn’t do it, we could do it. So for this person, let’s say early fifties, it was 2.5 million of life insurance over five years and the premium was around about a thousand pounds per month for the person. And to give an example of what we would maybe do with the standard UK insurer, again, somebody was, this person was mid fifties, they were UK and there were UK expats, but they were based in Asia, they did have a UK mortgage on their property, their family was here, so able to use a UK insurer.

(47:31):

So we did the 500,000 of level cover to age 17 and that was to about 110 pounds per month. And that was all set up specifically to make sure we’re covering the mortgage term and also keeping within budget as well. So they’re the two examples of just obviously how much it can differ between the international doing the UK one potentially those prices if we’re going into the higher value versus the ones where we’ve kind of seen quite an average size. Some are short of about 500,000. But there’s my examples for you Matt. I hope they were useful.

Matt (48:04):

Thank you. Yeah, they’re interesting. Have we got time for me to add a couple of comments? Yeah, absolutely. Okay. I think some insurers in the uk, they will arrange medicals in foreign, particularly in Europe, yes, themselves. And via one of the third party providers, the medical third party providers, they will talk to X, Y, Z in Greece or Italy or wherever, France, and they will deal directly with that medical clinic to South Africa is another example where that medical examination can be done. I don’t think we’ve necessarily talked about what in the uk, our term GP records in most of Europe, certainly South Africa, the GP record as we know, it doesn’t exist. Now I have to be careful by saying it doesn’t exist. What I’m specifically mean by that is that the life assured may have a doctor they go and see for most routine ailments and that doctor will keep records of wherever the consultation, whatever they’ve done with that consultation.

(49:30):

However, and the key point I think is here that whilst in the UK we have a central NHS system, which collates all of the records on that individual, that doesn’t exist overseas. So a doctor, it can be a general physician, can certainly have records on that individual, but if that individual has gone elsewhere, then there is no central place to ensure that you can see all of the records. And therefore insurers, as Kathryn’s alluded to, will certainly get medical examinations. But that’s not to say that they won’t ask the individual usually upfront by the distributor, whether the name of their doctor, they will often have a doctor. Whether that doctor all the records or not is another point. And of course, when you’re getting into the very big sums assured, then that doctor will often be contacted for the records that they have. And believe me, because I’ve seen them, some of them are quite extensive, but we just have to be wary as risk managers that it’s not necessarily all of the records on that individual.

(50:52):

Generally in the UK they are held centrally, although these days with the private doctors that are used, people just walking off the street into a clinic, et cetera, et cetera, maybe even the UK ones aren’t as concise as they used to be. I hope that adds a little bit, Kathryn. Yeah, no, it just saying that you, there’s a bit of a mix and match in terms of the medical examinations. I just wanted to clarify the why exams tend to be more important than maybe they are in the uk. Purely because we haven’t got the history, we can’t necessarily be sure that we have the history.

Kathryn (51:32):

Definitely. And it can prove a real issue at times. Absolutely. When you don’t have that, there’s holes in the medical history that’s some insurers just go, we just can’t because we just can’t see enough there. So it’s a very, very good point to bring up. So thank you very much. So thank you Matt. This has been a really, really good episode. Thank you everybody for listening. It’s been lovely to have you back with us, Matt. And as always, everybody, if you would like your Ccpd certificate, please visit the website, practical hyphen protection dot cot uk and you’ll get our CBD because we are sponsored by Okta members, which is a great thing to be a part of. So thank you everybody and I will speak to you soon.

Matt (52:10):

Take care. Bye.