Appropriate life insurance is essential to tax-efficient estate planning for high-net-worth (HNW) Australian expats. Most personally-held Australian life insurance policies provide tax-free lump sum payments to beneficiaries for Australian income tax and capital gains tax purposes, ensuring financial stability for the deceased’s family members.
However, not all policies offer cross-border benefits or remain fully effective once you become a non-resident, and overseas tax rules may affect the amount beneficiaries ultimately receive.
This guide provides practical life insurance advice for Australian expats seeking effective strategies to improve their estate planning and manage cross-border tax exposure while living abroad.
What You Will Learn
- Whether to retain an Australian life insurance policy as an expat.
- How residency status affects the validity and portability of Australian policies.
- The tax implications of retaining life insurance in Australia while living abroad.
- Effective strategies to structure and manage life insurance policies as an HNW Australian expat.
Can You Retain Australian Life Insurance While Living Overseas?
While maintaining life insurance in Australia is often a more cost-effective option for Australian expats due to the tax benefits involved, not all expats are eligible to retain or purchase a life insurance policy in Australia.
The validity of existing Australian life insurance for expats is assessed based on the following criteria:
- Residency status: In most cases, only individuals considered permanent residents of Australia or those who hold, or are applying for, an eligible visa and maintain acceptable ties to Australia qualify for new life insurance. To be considered a permanent resident, you must have an Australian bank account and a residential contact address in Australia. Some insurers may also require that you spend limited periods overseas or confirm an intention to return, although this varies by provider and underwriting policy.
- Country of residence: Insurance providers can refuse to provide coverage to expats living in countries that the Department of Foreign Affairs and Trade (DFAT) considers high-risk due to political instability or that are under sanctions from Australia, like Russia, Somalia, and Yemen. If the country of residence is not blacklisted, you have to prove that you work and reside in it legally.
In case you want to obtain an Australian life insurance policy while residing abroad, on top of the above criteria, the insurers usually consider:
- Employment status: Individuals in white-collar professions have higher chances of qualifying for life insurance than those working high-risk jobs such as mining and construction.
- Age: Younger applicants are more likely to qualify for life insurance and receive favourable premium rates.
- Medical history: Individuals with severe health conditions are often denied life insurance but can apply for disability insurance in Australia, provided they’re still permanent residents.
Whether some or all of the criteria above are taken into account depends on your policy provider and whether the insurance is held inside or outside your superannuation fund.
Portability and Long-Term Validity of Your Cover as an Australian Expat
When living overseas long-term, it is essential to confirm that your Australian life insurance policy remains valid in your new country of residence.
Most Australian insurers require policyholders to notify them of any permanent or extended move abroad, as residency changes can alter the insurer’s risk assessment and the conditions under which claims will be paid.
Address and Residency Updates
Insurers generally require an up-to-date residential address and contact details. Notifying your provider when you relocate helps ensure uninterrupted communication regarding premium notices, policy changes and renewal requirements.
Failure to update your address may lead to missed correspondence and, in some cases, policy lapse.
Country Restrictions and Sanctioned Locations
While many Australian insurers offer worldwide cover, certain jurisdictions can be excluded due to political instability, sanctions, or elevated security risks.
If you live in, or travel through, a restricted country for extended periods, some policies may limit cover or impose additional conditions.
Insurers may also decline claims arising from activities in prohibited locations, depending on policy wording. Written confirmation from your insurer is essential if you reside in a country subject to travel advisories or sanctions.
Long-Term Non-Resident Status
Living overseas as a long-term non-resident does not automatically void an Australian life insurance policy. However, insurers may review the policy’s terms if you are no longer based in Australia, particularly for older policies under legacy underwriting rules.
Some providers also impose time limits on how long a policy can remain in force without the policyholder returning to Australia, while others allow unlimited portability. Always confirm whether your residency status affects ongoing cover, premium loadings, or policy renewability.
Claim Processing When Death Occurs Overseas
Claims arising from a death overseas can take longer to process due to additional documentation requirements. Insurers may request translated and certified death certificates, medical records from local hospitals, or verification from foreign authorities.
Some insurers also require confirmation that the death occurred in a country recognised under their claims protocols.
Beneficiaries should be aware of these requirements and maintain accessible records, particularly if residing in a country with less formalised documentation systems.
What Types of Australian Life Insurance Can You Retain as an Australian Expat?
Insurance held inside super funds is usually reserved for Australian residents and may not remain appropriate or fully valid for expats who don’t meet the criteria for an ordinary resident.
Individuals planning to live overseas permanently or leave Australia for an extended period may find that claims are restricted under some policies, or that their cover lapses due to inactivity or fund rules.
Life insurance policies purchased from independent companies, unrelated to the super fund, can continue to provide coverage for expat non-residents. However, it’s advisable to obtain a written confirmation from the insurer to avoid a potential policy lapse.
Policies held outside of the super are more suitable for HNW expats as they usually provide:
- Higher coverage limits tailored to the insured party’s specific needs
- More control over beneficiary nominations
- Faster payouts upon a member’s death
- International coverage
These policies can be used to supplement super fund insurance or leveraged as a sole form of insurance protection.
Estate Planning Considerations When Your Beneficiaries Live Overseas
When your beneficiaries live overseas, life insurance can interact with foreign tax and estate laws in ways that may affect the final benefit they receive. Key considerations include:
- Foreign tax treatment: Different countries may apply inheritance, estate or income tax to life insurance payouts. The actual amount your family receives can depend on their local tax rules, not just Australian laws.
- Forced heirship and succession rules: Some jurisdictions require assets to be distributed in set proportions to certain family members. In these countries, life insurance proceeds may be treated as part of the estate and subject to mandatory distribution unless structured correctly.
- Local documentation requirements: Overseas claims often require translated or notarised death certificates, medical records or confirmation from local authorities. In some countries, this can delay payouts.
- Coordination with your broader estate plan: Ensuring that beneficiary nominations and policy ownership align with both Australian and foreign estate rules can reduce disputes and ensure the payout reaches the intended person.
Keeping these factors in mind helps ensure your life insurance supports a smooth and tax-efficient transfer of wealth to family members living abroad.
How Australian Tax Residency Affects Your Life Insurance as an Expat
Understanding your Australian tax residency status is essential when reviewing life insurance as an expat.
Becoming a non-resident for tax purposes does not automatically cancel your insurance, but it can influence how your cover is treated, how premiums are paid and funded, how future benefits are taxed, and what conditions apply to policies held inside or outside superannuation.
Impact on Policies Held Through Superannuation
If you are a non-resident, most Australian super funds will continue to hold your balance, but insurance inside super can be affected.
Premiums must still be funded, and inactivity rules may cause the policy to lapse if contributions stop for 16 months unless you opt in.
Super-based life insurance also applies specific tax rules to death benefits, which can affect non-dependent beneficiaries regardless of where they live.
In addition, super funds may restrict new insurance applications from members who are already living overseas, and some policies do not cover events that occur in certain high-risk jurisdictions.
Personally Held Policies and Non-Resident Status
Premiums on retail life insurance policies held outside super generally continue unchanged after you become a non-resident. However, insurers may reassess risk if you relocate to a higher-risk country or occupation.
From a tax perspective, Australian law typically treats death benefits from personally owned policies as non-assessable, but overseas tax rules can still apply depending on where your beneficiaries live.
Non-resident policyholders should also be aware that payment methods may differ, and some insurers may require premiums to be paid from an Australian bank account or via international transfer.
Why Tax Residency Matters for Long-Term Expats
Your tax residency determines which tax system applies to your global assets, including how foreign jurisdictions treat Australian life insurance payouts.
Some countries classify death benefits as income, others treat them as part of the estate, and some levy inheritance, estate or succession taxes regardless of where the policy was issued.
Understanding your residency position helps ensure your policy is structured correctly and aligned with your long-term estate planning goals.
What Are the Tax Implications of Holding an Insurance Policy in Australia as an Expat?
Due to their favourable tax treatment in Australia, life insurance policies enable HNW expats to protect their assets from substantial tax rates and transfer a significant portion of their wealth to their family members.
Payouts from personally owned insurance policies are tax-free regardless of your relationship to the beneficiaries and the payment amount, which makes them suitable for tax-efficient estate planning.
Benefits from life insurance policies held through superannuation are only tax-free for dependent beneficiaries, namely:
- Your spouse or de facto partner.
- Children under 18.
- A person you are in an interdependency (close, personal) relationship with.
Non-dependent beneficiaries are subject to tax on super fund life insurance payouts. The rates depend on the amount of taxed and untaxed elements the payout contains and range from 17% to 32%.
Additional taxes may apply if the super fund contains untaxed elements created by insurance proceeds or if the beneficiary resides in a jurisdiction that treats superannuation benefits as taxable foreign income.
Are Australian Life Insurance Policies Tax-Deductible?
Some types of life insurance policies in Australia receive favourable tax treatment, either because premiums are deductible to the super fund or, in some cases, to you personally. Rather than all premiums being deductible by the policyholder, the deductibility depends on the policy type and how it is owned. You can typically benefit from tax deductions in the following ways:
| Type of Life Insurance | Overview | Eligibility for Tax Deduction |
|---|---|---|
| Term life insurance | Provides lump sum payments to the beneficiaries within an agreed-upon period in the event of the policyholder’s death. | Tax-deductible when held within the super fund (deduction claimed by the fund, not the individual). |
| Total and permanent disability (TPD) | Pays a lump sum if the policyholder becomes permanently unable to work due to an injury or illness. | Tax-deductible when purchased through a super fund (deduction claimed by the fund). |
| Income protection insurance | Provides monthly payments to replace lost income if the policyholder is unable to work due to illness or injury (temporary or long-term). | Tax-deductible when held personally; different rules apply when held inside super. |
TPD and income protection insurance are available to expats who are Australian residents but are difficult to obtain or retain once they cease to be an Australian taxpayer.
Still, most insurance providers allow expats to retain their term life policies held outside superannuation. While these types of life term insurance aren’t tax-deductible, they are suitable for tax-efficient estate planning because they usually provide tax-free payouts.
However, tax residency changes may affect whether premiums inside super can continue to be funded through contributions, which can impact the longevity of cover held within a super fund.
How Is Australian Life Insurance Taxed Overseas?
If your family resides overseas and receives death benefits from an insurance policy held in Australia, the payouts may be taxed abroad. The procedure and amount depend on the tax laws of the foreign country.
For instance, the US imposes taxes on certain forms of insurance-related income and may subject worldwide estates to estate tax for US citizens and domiciliaries, even if the income is generated overseas.
In addition to income tax, many countries apply estate or inheritance tax to life insurance proceeds. Depending on your beneficiaries’ residency, the death benefit may be treated as part of the taxable estate, even if it is tax-free in Australia.
Jurisdictions such as the US, UK, Spain and France may apply estate, inheritance, or succession tax regardless of where the policy originates.
Some countries also impose reporting requirements on beneficiaries or policy owners. For example, US persons may need to report certain life insurance values under FATCA, and residents in CRS-participating jurisdictions may see policy information exchanged automatically between tax authorities. These rules can affect privacy and compliance obligations.
You may be able to offset taxes paid in one jurisdiction against your tax liability in the other if Australia has a double taxation agreement (DTA) with your current country of residence.
However, most DTAs do not explicitly cover life insurance death benefits, meaning relief may not always apply. This rule only applies if both jurisdictions have the right to tax your life insurance payouts.
Life Insurance Advice for Australian Expats: How To Maximise Coverage and Minimise Taxes
The following effective strategies offer sufficient insurance protection for HNW Australian expats while living overseas:
- Reviewing existing life insurance policies
- Considering underwritten insurance
- Purchasing private placement life insurance
- Exploring local insurance policies
- International life insurance options (including IUL/UL)
- Foreign Currency and Exchange-Rate Risks
- Working with a financial adviser
Review Existing Insurance Policies
Australian expats who plan to retire abroad or remain overseas for more than five years should assess their existing Australian insurance policies to determine whether they provide international coverage and retain validity regardless of their residency.
Confirming that your policy provides coverage to Australian non-residents is crucial to avoid relying on coverage that may deny payouts in the future. Although cancelled insurance policies typically don’t offer refunds, cancellation is often more beneficial than retaining a policy that no longer provides coverage and won’t guarantee payouts when you pass away.
Individuals who hold an insurance policy within an Australian superannuation fund should regularly review their policy as their insurance will be cancelled automatically if they don’t contribute to the super fund for over 16 months.
It’s advisable to consider options that provide international cover and benefits for HNW individuals. Seeking alternatives is particularly important for those holding insurance within superannuation as such policies offer low coverage that usually can’t provide sufficient support for an entire family.
Claim Considerations When Death Occurs Overseas
If you hold an Australian life insurance policy while living overseas, it’s important to understand how claims are handled when the insured person dies abroad. Claims can take longer to process due to additional documentation requirements, and insurers often need extra verification from foreign authorities.
To minimise delays, keep your insurer updated with your current overseas address, store policy details where family can easily find them, and ensure beneficiaries know which insurer to contact. Regular policy reviews help confirm that cover remains valid in your country of residence and that your family understands what documents may be required.
Consider Underwritten Insurance
Life insurance underwriting involves evaluating specific risk factors, such as lifestyle, health, and occupation, before the insurer agrees to provide coverage.
Underwritten insurance policies are more suitable for HNW Australian expats due to their unique living and financial circumstances. For instance, upon applying for underwritten insurance, you can inform the provider that you plan to live overseas. This enables them to review your situation and decide on your eligibility for coverage.
Since companies providing underwritten insurance tailor the policy to your personal needs, they offer more comprehensive protection than default insurance options. If the provider agrees to the policy, your coverage will remain valid even if you cease to be an Australian taxpayer.
Like default insurance, underwritten insurance can be held inside or outside the super fund. Consult the table below for the pros and cons of each option:
| Type of Underwritten Insurance | Benefits | Drawbacks |
|---|---|---|
| Inside the super fund |
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| Outside the super fund |
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Purchase Private Placement Life Insurance
A private placement life insurance (PPLI) policy is a type of variable, underwritten life insurance designed for high-net-worth individuals. It allows them to invest their wealth in a policy that grows with each payment. The policy also provides a death benefit to beneficiaries and includes tax advantages.
Both Australian and offshore insurance companies offer PPLIs to investors who meet specific criteria, such as having a net worth of over $1 million or income of at least $200,000. The exact eligibility conditions vary depending on the provider and jurisdiction.
These policies offer flexible premiums based on your financial situation, allowing you to increase or decrease premium payments. They also include a cash value growth component funded by each premium payment and growing tax-deferred. You can then invest the cash value in various investment options, including stocks, bonds, hedge funds, and private equity.
Besides lucrative investment opportunities, purchasing a PPLI as an HNW Australian expat can provide the following benefits:
- Tax advantages: In many jurisdictions, a properly structured PPLI death benefit is free from income tax for the beneficiaries, and the cash value and investment growth within the policy are tax-deferred, subject to local tax rules.
- Creditor protection: These policies provide comprehensive asset protection, shielding their cash value and death benefit from creditors.
- Estate planning support: If your residential country imposes estate tax, your PPLI may not count toward the estate tax limits, provided it’s structured properly in a tax-efficient solution like an irrevocable life insurance trust (ILIT).
Consulting a financial adviser at Titan Wealth International can help ensure your PPLI is structured with the aim of achieving tax deferral, asset protection, and estate tax efficiency.
Our expert advisers provide guidance in coordinating your PPLI investments with your long-term wealth plan and assist you in maintaining regulatory compliance while residing overseas.
Key Cross-Border Considerations for PPLI and Other Offshore Life Insurance
While PPLI can offer powerful tax and estate-planning advantages for HNW Australian expats, these structures also carry additional cross-border considerations that do not apply to standard term or whole-of-life cover.
The rules that govern offshore insurance vary significantly between jurisdictions, and poor structuring can create unexpected tax, reporting, or succession issues, particularly if you later return to Australia or have family members in different tax systems. The most important factors to review include:
- Australian CFC and Foreign Investment Fund (FIF) considerations: Although an expat may be a non-resident, offshore policy wrappers can still trigger anti-deferral rules if the expat returns to Australia or retains Australian tax ties.
- Returning to Australia: Accumulated gains inside certain offshore structures may become taxable again if you re-establish Australian tax residency.
- US-connected family members: US citizens/residents face FATCA reporting, potential Modified Endowment Contract (MEC) status, and US estate tax exposure.
- Foreign tax regimes: Some jurisdictions may tax cash value or treat death benefits as part of the estate.
- Forced heirship and succession laws: In many civil-law jurisdictions, life insurance proceeds may be treated as part of the estate and subject to mandatory distribution unless correctly structured.
Explore Local Insurance Policies
Australian expats who plan to remain abroad permanently can seek life insurance in their new country of residence. This option allows beneficiaries to receive the death benefit in a local currency, avoiding exchange rate risks.
But if you or your family decide to return to Australia, holding an insurance policy overseas can expose payouts to fluctuating exchange rates, potentially reducing the death benefit.
Purchasing a foreign insurance policy requires a thorough understanding of international tax laws, so it’s necessary to consult a professional financial adviser before obtaining such policies to ensure they’re tax-efficient and align with your financial goals.
International Life Insurance Options for Globally Mobile Australian Expats
For Australian expats who may return to Australia or relocate to another country, an international life insurance policy can offer more flexibility than a policy tied to one jurisdiction.
These policies are designed for globally mobile individuals and can remain valid across multiple countries, provided the insurer accepts the new residence and policy terms continue to be met.
Why International Cover May Suit Expats
International policies help maintain uninterrupted protection if you:
- Move between countries for work or lifestyle.
- Expect future changes to your residency.
- Have beneficiaries living in different jurisdictions.
- Want to avoid reapplying for cover later in life when underwriting may be stricter.
International life insurance types can include traditional international term/whole-of-life policies as well as globally portable universal life options such as Indexed Universal Life (IUL) or Universal Life (UL).
These differ from PPLI because they prioritise protection and portability, not investment-led tax planning.
Cross-Border Portability
Unlike many domestic Australian or local in-country policies, international expat policies are usually portable.
Coverage typically continues when you move, as long as the insurer operates in your new country and your circumstances remain within their risk guidelines.
Currency and Beneficiary Flexibility
International policies often allow premiums and payouts in major currencies (AUD, USD, GBP, EUR), which can reduce exchange-rate risk and simplify claims for beneficiaries overseas.
This option is typically suited to HNW expats who expect continued mobility, have global family arrangements, or need long-term cross-border estate-planning flexibility.
Foreign Currency and Exchange-Rate Risks
For Australian expats, the currency of your life insurance policy can impact both premium costs and the value your beneficiaries receive. If your policy pays out in AUD while your family lives overseas, exchange-rate movements may reduce the real value of the benefit at the time of payout.
Premiums and Payouts
Paying Australian premiums from a foreign income can become more expensive when the AUD strengthens, and conversion fees may add further costs. Likewise, beneficiaries may need to convert an AUD payout into their local currency, exposing them to FX volatility.
Multi-Currency Options
Some international insurers offer USD, GBP or EUR-denominated policies, which may better match your family’s long-term expenses. These options can reduce FX risk but may differ from Australian policies in cost, taxation and regulatory protections.
Work With a Financial Adviser
Consulting a financial adviser is crucial when seeking life insurance for Australian expats. These professionals possess expert knowledge of cross-border tax regulations, so they can assist in choosing an insurance policy that meets your needs and minimises tax exposure.
Financial advisers can provide the following:
- Tailored life insurance recommendations based on your circumstances.
- Guidance in determining how your tax residency impacts insurance coverage.
- An investment strategy within the policy that aligns with your financial goals and risk tolerance.
- Suggestions on how to structure additional tax advantage products, like trusts, to improve estate planning.
- Help with remaining tax compliant and utilising tax treaties to prevent double taxation of insurance payouts.
- Assistance with navigating potential fees associated with surrendering a policy.
- Choosing the right currency depends on where your beneficiaries live and your exposure to exchange rate movements. A financial adviser can help determine whether an Australian, local or multi-currency policy is most appropriate.
Complimentary Life Insurance Consultation for Australian Expats
Choosing the right life insurance as an Australian expat requires more than comparing premiums. Your residency position, international mobility, and cross-border tax exposure all influence which policy structure provides the most effective protection for your family and long-term wealth.
In a complimentary introductory consultation with Titan Wealth International, you will:
- Review whether retaining Australian cover, replacing it, or adding an international policy best suits your global lifestyle and future plans.
- Understand how foreign tax rules, currency exposure, and beneficiary location may affect both premiums and the final benefit paid.
- See how Titan Wealth International can support you in aligning your life insurance arrangements with your long-term wealth, tax, and estate-planning objectives across multiple jurisdictions.
Key Takeaway
Receiving professional life insurance advice for Australian expats enables you to secure substantial international coverage, protect your assets, and transfer as much of your wealth to beneficiaries as possible.
This guide explained whether you can and should retain existing insurance policies held in Australia and how different types of policies impact your tax liability. It also provided practical life insurance advice for HNW Australian expats that prioritises tax efficiency, estate planning, and wealth retention.
Titan Wealth International can assist Australian expats in evaluating cross-border insurance options, ensuring that existing or new policies remain suitable across multiple jurisdictions.
They can also support the structuring of international solutions, such as PPLI and other globally portable policies, so these arrangements integrate appropriately with each client’s wider estate, residency, and long-term wealth strategy.
The information provided in this article is not a substitute for personalised financial, tax or legal advice. You should obtain financial advice and tax advice tailored to your particular circumstances and in respect of any jurisdictions where you may have tax or other liabilities. Titan Wealth International accepts no liability for any direct or indirect loss arising from the use of, or reliance on, this information, nor for any errors or omissions in the content.
