International Disability Insurance: What to Expect From Your Coverage While Abroad

Long-term disability insurance can replace a portion of your income if you’re unable to work due to an injury or illness. However, expats and avid travelers might run into issues with fine print when it comes to their policy’s international disability insurance coverage.

Most disability insurance coverages extend to international travel and living abroad

Most long-term disability (LTD) insurance policies offer some level of coverage while overseas. Generally speaking, your disability coverage extends to wherever you are, as long as the location isn’t considered dangerous and the injury or illness isn’t specifically excluded from your policy.

But the parameters of your international disability insurance coverage depends on the insurance carrier and other important factors. For example, policies won’t likely have a travel restriction if you’re going on vacation for a couple of weeks, but you may run into red tape if you’re planning an extended trip abroad for several months or more. Your policy might also have different terms and conditions if you move outside of the United States.

Policy exclusions can disrupt disability insurance while abroad — Here’s what to look for

One of the greatest benefits of choosing individual disability insurance is the opportunity to customize a policy based on your needs. When you apply for disability coverage, the insurance company dives into your background during the underwriting process to consider risk factors, such as your occupation, age, gender and medical history. 

But the insurance agent also asks about your hobbies and interests, including whether you plan to travel. The answers to all of these questions and considerations determine your overall disability coverage and costs.

Because LTD policies are tailored to the individual, each policy is different. Therefore, there might be limitations or policy exclusions that can significantly change your coverage.

Plus, situations are constantly changing. It’s important to understand exactly what is and isn’t covered if you plan on spending time abroad. Here are a few key details to look for when considering international disability insurance coverage.

Foreign travel exclusions that deny coverage

If you travel more than three months out of the year, insurance carriers might choose to deny coverage altogether. But in many cases, the carrier will include a policy rider — a foreign travel exclusion rider — to account for your travel plans instead.

A foreign travel exclusion rider typically excludes the countries you plan to visit, preventing you from collecting disability insurance benefits from a disability that occurs while traveling.

International residency limitations on disability benefits

If you plan to live and work overseas, some insurance carriers continue to cover you for the full benefit period. But, depending on the policy, your ability to receive disability benefits might be limited after a specified time period.

For example, The Standard — one of the “Big 5” disability insurance carriers for own-occupation coverage — limits benefits if you live outside of the U.S. or Canada. Specifically, it won’t pay disability benefits for more than a total of 12 months while living abroad. However, if you return to the U.S. or Canada, you might be eligible to resume benefit payments.

Principal, another “Big 5” insurance company, might also limit benefit payments to 12 months while residing outside of the U.S. or Canada. This could apply if you live abroad for more than six months each year.

Alternatively, the insurance company might choose to lump foreign travel and residency under one umbrella. For example, the policy might only pay up to a maximum of three months of disability benefits for any disability sustained or continued outside of the country.

Country-specific restrictions can change in an instant

Disability insurance plans often have restrictions based on traveling or living in dangerous locations. For example, certain countries might automatically be excluded from coverage if it’s an active war zone or considered a “remote” or “unsettled” location. 

Additionally, policy restrictions can change based on government travel warnings or other red flags that indicate a location might be dangerous.

Dig into the details of disability insurance if you’re planning for travel or relocation

Some disability insurance carriers let you travel or reside overseas without limitations or requirements to return to the U.S. to receive disability benefits. But others limit coverage by including a foreign travel exclusion rider or placing residency limitations that can impact your ability to collect disability income. 

These types of restrictions ensure the insurance company can easily manage claims, limit interactions with foreign healthcare systems and monitor policyholder activities to make sure there aren’t inconsistencies with a potential claim.

Since there are many international disability insurance coverage variations, you’ll need to dig into the details of your existing policy to better understand the following:

• How long you can spend in a foreign country before suspending disability benefits.
• If, and when, you can resume benefits (e.g., six months after moving back to the U.S. or Canada).
• When monthly premiums will resume if your benefits are suspended.

If you’re in the process of shopping around for disability insurance, you’ll want to apply for coverage before going abroad to increase your chances of approval. 

Otherwise, you might need to look into other forms of income protection or consider applying for Social Security disability insurance (SSDI) while overseas. While it’s considerably harder to qualify for, SSDI covers eligible recipients in most countries, regardless of how long you plan to stay there.

Plan to regularly travel or visit loved ones outside of the U.S.?

It’s best to work with an independent insurance broker if you plan to regularly travel or visit loved ones abroad or live outside the U.S. for large chunks of time. Fill out the form below, and SLP Insurance will create a custom quote for own-occupation coverage that’ll put you in the best position no matter where you travel or live.