In this post, we’ll look at how to compare whole life vs. term insurance and show how to protect your loved ones while you’re on the move.
These days, selling everything and running off to a foreign country isn’t just an option for madcap heiresses like Julia Roberts in Eat, Pray, Love. In fact scores of Americans—from recent college grads to retirees— have taken up the digital nomad lifestyle, jumping from one exotic location to another as the mood hits them. But this shoestring, jet-set lifestyle comes at a price. Much of the security that comes from having a conventional, 9-5 job in the good ‘ole USA—such as health insurance and a consistent paycheck— are often DIY undertakings. For digital nomads—especially those with families—life insurance for is often another head-scratcher. We’re here to help you with that.
Let’s take a look at how life insurance can eliminate some of the risks of your semi-permanent location status.
Whole Life vs. Term Insurance Checklist : What’s Your Nomad Profile?
Today’s digital nomads aren’t just surfers with an itch to party in Chiang-Mai, or start-up visionaries with more ambition than capital. Many digital nomads are also parents, determined to give their children a world-class education abroad, entrepreneurs, and driven individuals with loved ones they help support.
Understanding your nomad profile—and how your current lifestyle and financial goals might change over time—will help you make the right choice when deciding between whole life vs. term life insurance.
» Calculate: Life insurance needs calculator
First, let’s look at your digital nomad profile.
Are you part of a digital nomad family?
Do you have a partner, children, or other dependents for whom you are the sole source of support?
If you are the primary or sole breadwinner for your family, your coverage needs will be very different than those for a single nomad, and they may vary wildly depending on the cost of living where you live. It’s a good idea to make sure that the life insurance policy that you choose offers coverage that will not only replace the loss of your income, but also pay for extra costs—such as childcare or legal fees to acquire a work visas—as your partner looks for full-time employment.
Does your partner work full-time to help support the family?
If so, when considering coverage amounts, you should take into account how your loss may impact their ability to remain employed full-time. Would they have to take on extra work in addition to keeping their full-time job in order to cover costs? Will they have to pay for additional childcare costs? Will they have to move to another city or even another country to find a lower cost of living? When thinking about your insurance needs, it is wise to get enough coverage to protect your family irrespective of your partner’s employment status. If your partner loses their job, or if they take on extra work and it proves untenable, then your loved ones could be burdened with a total loss of income.
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Do you have a partner, child, or other loved one with special needs?
If your loved one has special needs then the complications of frequent travel, and possibly the need for special medical support, will make nomadic life especially challenging without you. Will your family need to return to the USA for extra family support if you pass away? If you provided care for your loved one, will your partner or their guardian be able to find a suitable caregiver to step in if they must look for work and take on new responsibilities? Is it possible that your special needs loved one be able to become fully independent over time with physical therapy or other medical intervention, or is it likely that they will need care throughout their lives? If you do have a special needs loved one, bear in mind that these potential costs are important as you choose between whole life vs. term insurance.
Are you a single nomad?
Do you have financial obligations, such as private student loans, that your parents or other loved ones cosigned?
If so, this means your co-signers or guarantors may be held liable for the full amount that you still owe, should something happen to you. For example, if you sublet your apartment when you decided to travel and your parents served as guarantors for your lease, once that sublet is over then your parents will be responsible for paying your rent for the remainder of your rental term. The same goes for private student loans. If your account becomes delinquent, your co-signers will be responsible to pay the balance. Unlike federally-backed student loans, private lenders are not legally obligated to discharge your debt upon your death. With the average private student loan debt estimated at about $39k, this can be a burden for your loved ones.
Are you an entrepreneur?
Do you have a small business that you’ve financed with credit cards or business loans that you personally guaranteed?
If you’ve taken on debt in order to support your fledgling startup, then your creditors may have a right to claim a share of your estate if you pass away. If your bills remain unpaid after your debt and your creditors take you to court, they could win a judgment against your estate. This means that your personal accounts could be frozen while the judge organizes debt repayment. You also may want to consider the cost of any legal fees that may arise if your business is sold. Just like with private student loans, if a family member co-signed your debt, they may have to cover this as well— in addition to any legal costs. When selecting between whole life vs. term insurance, it is smart to get a handle on how much business debt you are personally responsible for, and how that unpaid debt may impact your estate.
Are you a digital nomad retiree?
Are you and your partner planning to retire to parts unknown?
For many retirees, heading down to Florida spend their golden years playing golf isn’t at all appealing. In fact, they’d much prefer to wake up to the sound elephants trumpeting in the distance than a fellow retiree yelling fore! If you and your partner are planning to go where the wind takes you during your retirement, it is wise to include protection for your retirement fund when choosing a life insurance policy, in addition to coverage for household expenses.
Are you a pet parent?
Do you have pets that you wish to provide for if you pass away?
As a pet parent, you know the challenges of traveling with your furry family member. From confusing quarantine rules to local animal protection laws, your commitment to provide the best life for your pet is probably tested every time you set up shop in a new locale. Of course it’s well worth it, but you probably wonder if your pet’s potential guardian will be able to put in the time—and cover pet care expenses—the way you do. It is possible to designate a pet guardian and provide them with funds to care for your pet after you’ve passed. A trustee can be appointed to administer payments and make sure that your pet receives the love and security that they deserve. Just like with your human family, the long-term cost of care for your pet is an expense to be considered when looking at your whole life vs. term life options.
Of course, none of these categories are mutually exclusive. Digital nomads are single parents, large families with pets, retirees raising grandchildren, etc. Knowing how to choose between whole life vs. term life insurance really depends on the future you envision for yourself and your family and where you are going in life, regardless of where you travel.
Your Digital Nomad Profile: Who Do You Love and What Do They Need?
Your digital nomad profile is just a snapshot of who you are as an adventurous lifestyle traveler. Because no one has just one role in life—you aren’t just a pet parent, entrepreneur, or a retiree—there is no one-size-fits-all answer to how to choose between whole life vs. term insurance. You can, however, pinpoint your best options based on the most important criteria of all: who do you love and what do they need?
Here are a few options based on some common lifestyle profiles:
We are a family living abroad with young children. I am their sole source of income.
My family needs coverage that will:
- Provide income replacement
- Pay any transport and legal fees involved with repatriation
- Cover funeral and burial costs
- Provide funds for returning to the USA
Whole Life vs. Term Life
Whole life insurance will provide protection through your partner’s and children’s lives, as well as build up cash valuable that you may withdraw or borrow against. Whole life is very expensive, however, and may offer more coverage than you actually need, especially when your children grown up and independent.
Term life insurance provides coverage for a specific term. The most common terms are 10, 15, 20, 25, 30, and 35 years. As long as your premiums are kept current, your family’s financial future is secure, if you should die unexpectedly. Term life insurance policies can also be laddered, or purchased for different terms and amounts based on your family’s changing needs.
Best Choice: Term Life Insurance
Get your term life insurance quotes with our free tool. It’s simple, fast, and there is no-obligation to share your personal contact info to get your term life rate plans.
» Compare: Term life insurance quotes
I’m a single entrepreneur who has significant debt and travels frequently in far-flung regions for business.
My income is always uncertain, and I’d like to protect my parents from having to pay back my loans. I need a life insurance policy that will:
- Pay off my existing debt
- Cover any legal fees related to the sale of my business
- Provide funds sufficient to pay for any travel costs incurred in going abroad to manage my affairs
- Pay funeral and burial expenses
- Cover repatriation costs
Whole Life vs. Term Life
Although whole life will provide a set amount of coverage throughout your life, it is unlikely that the cost of the premiums that you will pay would be justified by the value you would receive. At some point, you will be able to pay down your debts. Saving money on your premiums makes sense as you can use those funds to make your debt disappear more quickly.
A term life plan can be purchased to match the life of your loan. If you estimate that your debt will be paid off in 10 years, then a 10-year plan would be a perfect fit.
Best Choice: Term Life Insurance
I have a child with special needs. Our family has relocated abroad to experience life at a slower pace and to enjoy a significantly lower cost of living.
While we have not chosen to purchase a home, we plan to remain in this part of the world. Our child will always need care. The type of policy that I select should:
- Provide funds for my child’s medical care throughout his or her life
- Replace the loss of income
- Enable my partner to continue to be the primary caregiver for our child
- Cover funeral and burial expenses
Whole Life vs. Term Life
Whole life insurance could be a good choice in this case. Because your child will always require significant care, there won’t be a time when they won’t need your financial support or another caregiver’s.
Term life insurance, however, can also be beneficial as extra protection for your partner. Whether or not this makes sense depends on the cost-of-living in the areas where your family chooses to settle, your debt load, and your joint financial goals.
Best Choice: Whole life Insurance, or a combination of term and whole life.
Digital Nomad Quick Tips: Getting to the Life Part of Life Insurance
One of the best aspects of being a digital nomad is the freedom to call virtually anywhere home. Regardless if you are on your own or with a family, it is important to follow some basic ground rules to make sure that the surprises of your travel-forward lifestyle are all positive ones.
- Be aware of your travel health insurance coverage status. Some countries will not let you enter without proof of current coverage.
- Keep an eye on the State Department’s travel advisories. You want adventure in exotic locations, sure, but not the kind of hot spots where you may need Jason Bourne to rescue you.
- Be sure to know visa requirements before you head out on your adventures.
- Be mindful of your tax obligations. As you travel, you will most likely still have tax obligations in the US, as well as tax liabilities in the state where you earn your income. Keep in mind that your life insurance premiums are not deductible.
- Join a network of other travel-happy expats. Not only will it be easier to blend in to the local culture where you land, but you’ll also have support if something goes wrong.
- Keep up to date on paying your life insurance premiums. If your premiums lapse while you travel abroad, so does your coverage.
The digital nomad lifestyle is not for the faint of heart—or those who aren’t clear on their financial goals and how to manage their money life. But, of course, you are—you’re still reading this post. Click through to our whole life vs. term life insurance guide to learn how to get your quotes today.
» Learn more: A Guide to Life Insurance for Non-U.S. Citizens
About the writer
Quotacy is the country’s leading broker for buying life insurance online. We are obsessed with making it easy for everyone who has loved ones who depend upon them to have life insurance.