Is it possible to get offshore insurance?

Offshore insurance products: are they available to South Africans and what are the benefits?

Jonathan Braans CFP®

Jonathan Braans CFP®

Private Wealth Manager

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Is it possible to get offshore insurance?

Reader Question: Please can you tell me if I, as a South African can purchase an (R10 million) offshore insurance policy?

Thank you for your question.

This is a very topical point of discussion at the moment as South Africans attempt to hedge themselves against the volatile effects of the Rand. Recently the Rand has been trading at or near R18/$ - a large depreciation in a fairly short space of time. This has led people to look at diversifying their portfolios towards an offshore bias – both from an insurance (risk) and investment perspective.

Getting into the specifics of your question, I am making a few assumptions. Firstly, your question does not state a specific type of insurance that you are looking for. In answering this question, I am assuming you are interested in long-term insurance (risk). Examples of this would be things such as life insurance, severe illness cover or capital disability cover.

In my opinion, every professional in South Africa should have some form of cover should they be unable to work due to either an accident or a medical diagnosis. As people get older, and build up their own assets and savings, the need for this tends to decrease as people become self-insurable and potentially able to live off the savings they have built up during the course of their employment.

Getting back to your specific question – the short answer is yes. One of the major insurance firms in South Africa does currently offer offshore life insurance, capital disability and severe illness cover.

The product essentially works in the following way: You pay a premium from your local bank account (in Rands). The premium you pay would depend on things like your age, your health, the type of cover you are looking for, as well as the amount of cover. The premium quoted will be an offshore currency amount, but the premium deducted will be in Rands at the prevailing exchange rate at time of debit. The cover will be in offshore currency and would increase by a certain percentage per year (depending on the option chosen).

When it comes to a claim event, the insurer will assist in setting up an offshore bank account to receive the offshore currency. That way, you do not need to bring the money back to South Africa if you do not want to.

For example, suppose you set up a pure life insurance offshore policy and have nominated your two children as beneficiaries. When you pass away, the insurer can assist in setting up an offshore bank account for the beneficiaries in order to ensure the proceeds from the life insurance pay out are kept offshore, in hard currency.

I hope this has answered your question. Offshore diversification is very important and should definitely be considered as a risk-mitigating strategy within one’s overall portfolio. Reach out to a financial advisor in order to ensure your portfolio is appropriately allocated from a geographical perspective.

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news article clipping about an article on offshore insurance products This reader question "Can I as a South African can purchase an  offshore insurance policy?" was published on Moneyweb on 6 October 2022

Please note that the information provided does not constitute financial advice; in fact, we are precluded from giving specific advice. Generic information is provided given the context of your question. We have limited details about you and your circumstances, and further details may impact any advice provided.

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