Protection
Life Insurance for UK Nationals Living Abroad: Cover Types and Jurisdiction
Arranging or keeping life cover gets more complicated once you live outside the UK: some insurers will not cover non-residents, the regulator that protects you depends on where the policy is issued, and a single misstatement can undo a claim. Whether you already hold a UK policy and are moving abroad, or you are arranging new cover as a non-resident, this page explains the main cover types, what changes with non-UK residency, and the factual mechanics of writing a policy in trust for UK Inheritance Tax.
Information only. Nothing on this page constitutes financial, tax, or legal advice. Pharos is an introducer and does not provide advice. A regulated specialist can help you assess your individual position. Read our full disclaimer.
Last reviewed June 2026. Fact-checked against primary sources. How we research this.
In short
Life insurance for UK nationals abroad is mainly term or whole-of-life cover. Which regulator protects you depends on where the policy is issued: a UK insurer brings FCA, Ombudsman, and FSCS protection, a foreign policy does not. The detail is where it counts: accurate disclosure, including your residency, decides whether a claim is paid, and writing a policy in trust can keep proceeds outside your estate for Inheritance Tax but carries its own trust charges.
What this involves
Life insurance is a contract between a policyholder and an insurer under which the insurer agrees to pay a specified sum (the sum assured) if the life assured dies during the policy term or, for whole-of-life policies, whenever death occurs. The contract is conditional on the policyholder paying premiums and on accurate and complete disclosure at the time of application. For UK nationals living abroad, additional considerations apply: which country's regulatory regime governs the policy, whether a UK-issued policy remains valid after the policyholder leaves the UK, and where any proceeds are taxed.
- Term assurance
- A life insurance contract that pays a fixed sum if the life assured dies within a defined period (the term). No payment is made if the life assured survives the term, and no cash value accrues. Source: FCA pure protection market study.
- Whole-of-life assurance
- A contract under which the insurer pays a sum assured on the death of the life assured regardless of when that death occurs, provided premiums are maintained throughout. The FCA has noted that for some whole-of-life products total premiums paid over a lifetime may far exceed the maximum conceivable payout.
- Sum assured
- The lump sum that an insurer contracts to pay on the occurrence of the insured event. Fixed at policy inception and does not vary with investment performance in straightforward term and whole-of-life products.
- Qualifying misrepresentation (CIDRA 2012)
- Under the Consumer Insurance (Disclosure and Representations) Act 2012, a misrepresentation made before or during a consumer insurance contract where the consumer failed to take reasonable care. Where deliberate or reckless, the insurer may avoid the policy and decline any claim. Where careless, the remedy is proportionate to what the insurer would have done with accurate information.
- Settled policy
- A life insurance policy held in trust (settled property) rather than owned outright by the life assured. Under HMRC rules, settled policies are treated as settled property for Inheritance Tax purposes; the proceeds are generally not part of the deceased's free estate on death. Trust arrangements carry their own entry, anniversary, and exit charges.
See the full detail: how this works
Term assurance pays a fixed lump sum only if the life assured dies within the policy term. If the life assured survives the term, no payment is made and no cash value accrues. Decreasing term cover reduces the sum assured each year, typically aligned with a reducing liability such as a repayment mortgage; the sum paid if the life assured dies close to the end of the term may be materially lower than the original sum assured. Whole-of-life assurance pays a sum assured on death whenever that occurs, provided premiums are maintained. Unlike term assurance there is no fixed end date. The FCA has noted concerns that for some whole-of-life products total premiums paid over a lifetime may far exceed the maximum conceivable payout. This is a factual observation from the FCA's pure protection market study, not a characterisation of any specific product.
For UK nationals living abroad, the governing regulator of the policy depends on where it was issued. A policy issued by a UK-authorised insurer is regulated by the FCA and PRA, meaning complaints can be escalated to the Financial Ombudsman Service and eligible claims may be covered by the Financial Services Compensation Scheme. A policy issued by an overseas insurer is classified by HMRC as a "foreign policy" and is governed by the laws and regulator of the issuing country; UK consumer protections do not apply. Some UK insurers only offer protection policies to people resident in the UK and will not issue new policies to applicants who live permanently outside the UK; whether an existing UK policy remains valid after the policyholder relocates depends on the specific policy terms and insurer. International and offshore policies may offer greater portability and currency options but fall outside the FCA regulatory perimeter.
Where a life insurance policy is owned by the life assured and not held in trust, the proceeds form part of the deceased's free estate on death and are subject to Inheritance Tax above the available nil-rate band (£325,000 as at 2026, frozen to 5 April 2031, with an additional residence nil-rate band of £175,000 for 2026-27 and 2027-28). Where a policy is written in trust, it becomes settled property under HMRC's rules; the proceeds are generally not part of the deceased's free estate. Placing a policy in trust may itself constitute a gift; premium payments into a trust may also be treated as gifts, subject to available exemptions such as the normal expenditure out of income exemption. Assets in discretionary trusts are subject to an entry charge on transfer, ten-year anniversary charges, and exit charges when assets leave the trust. The effectiveness and tax consequences of a trust arrangement depend on how it is structured and on individual circumstances; a regulated specialist must assess this.
Considerations and trade-offs
- Term assurance provides a defined payout for a fixed period but pays nothing if the life assured survives the term, regardless of how long premiums have been paid.
- Whole-of-life assurance is structured to pay a sum assured on death whenever that occurs, subject to premiums being maintained throughout. The FCA has noted that for some whole-of-life products total premiums paid over a lifetime may far exceed the maximum conceivable payout.
- Cover is conditional on accurate disclosure at application. Under the Consumer Insurance (Disclosure and Representations) Act 2012, a deliberate or reckless misrepresentation can result in the insurer avoiding the policy entirely and declining any claim. Residency status is a material fact and must be disclosed accurately.
- Writing a policy in trust is a legal mechanic that can place proceeds outside the deceased's free estate for IHT, but trust arrangements carry their own entry charges, ten-year anniversary charges, and exit charges. Premium payments into a trust may constitute gifts. The effectiveness of the arrangement depends on how the trust is structured.
- Expat-specific or offshore policies may offer greater portability and multi-currency options, but they are not FCA-regulated and fall outside UK policyholder protections. Gains on foreign life insurance policies may be taxable as income in the UK in certain circumstances when a chargeable event occurs.
- Portability if the policyholder moves again and currency mismatch between the sum assured and living costs in the country of residence are practical considerations that depend on the specific policy terms and should be confirmed with the insurer and a regulated specialist.
How Pharos can help
- 1.If you are sorting out life cover from abroad, the questions that matter are specific: does your existing UK policy still hold good now you live overseas, which insurers will write new cover for a non-resident, what must you disclose so a claim cannot later be challenged, and would writing a policy in trust help or hinder your Inheritance Tax position? Pharos introduces you to a regulated specialist who works through exactly these questions with people in your position.
- 2.The introduction covers which specialist is best placed given your country of residence, any existing policies, and your specific needs, not a generic referral.
- 3.There is no cost to ask and no obligation. Pharos does not pass your details to anyone without your say-so, does not sell insurance or advise on which cover type or trust structure is appropriate, gives no advice, and does not benefit from any product outcome.
- 4.Once an introduction is made, the regulated specialist takes on the engagement. Pharos stays available if further introductions or a different specialism are needed.
Situations where people consider this
Existing UK term policy, relocation to Spain
A British national in their 40s holds a 25-year level term policy taken out in the UK five years ago. They relocate to Spain for work. Whether the policy remains valid depends on the insurer's territorial terms and what residency information the policyholder disclosed at inception. If the policy permits non-UK residence, premiums may need to continue from a UK bank account. If the policyholder relocates again during the remaining term, they would need to check once more whether cover continues or requires re-underwriting. The outcome depends on individual policy terms and circumstances a regulated specialist can assess.
Seeking new cover as a non-resident in Singapore
A British national living in Singapore wishes to arrange life insurance for the first time since emigrating. Some UK insurers will not issue a new policy to a non-resident. International insurers may offer cover, but those policies may be foreign policies for HMRC purposes and would not be FCA-regulated. The currency in which any future payout is denominated, the governing law, and the complaint and compensation routes all differ from a UK-issued policy. The appropriate type of cover depends on individual circumstances a regulated specialist can assess.
Policy in trust and IHT planning
A British expat in their 50s living in Australia has a significant UK estate that may be subject to IHT. Writing a life insurance policy in trust could mean the proceeds do not form part of the free estate on death. However, the transfer of the policy into trust may itself be a chargeable event, ongoing premium payments may constitute gifts, and the trust may be subject to ten-year anniversary charges and exit charges depending on its structure. Whether this arrangement is appropriate and how it interacts with the rest of the estate is a matter a regulated specialist can assess.
Claim declined for non-disclosure
A British national living abroad took out an international life policy and did not disclose a pre-existing health condition at application, believing it minor and not relevant. The insurer investigates the claim on death and determines the non-disclosure was a qualifying misrepresentation under the policy terms. The insurer avoids the policy and declines the claim. The outcome in any specific case depends on the policy terms, the nature of the misrepresentation, and the applicable law; this illustrates why disclosure obligations extend to all material facts including residency and health history.
Whether any of these fits depends on individual circumstances, which a regulated specialist can assess.
Sources
- FCA: Pure protection market study press release
- HMRC IHT Manual IHTM20012: life policies and settled property
- GOV.UK: Trusts and Inheritance Tax
- GOV.UK: Inheritance Tax thresholds
- HMRC IPTM3330: definition of foreign policies
- HMRC HS321: gains on foreign life insurance policies
- Consumer Insurance (Disclosure and Representations) Act 2012
- Financial Ombudsman Service: misrepresentation and non-disclosure
Related guides, services, and tools
Services
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Good to know
Common questions
Can a UK national living abroad take out life insurance in the UK?
Some UK insurers restrict new policies to people physically resident in the UK and will not issue cover to applicants already living abroad or planning to move abroad permanently. Where an existing UK policy is already in force, whether it remains valid after relocation depends on the specific policy terms, including any territorial restrictions. A regulated specialist can confirm which insurers and policy types are available to non-residents.
What happens to a UK life insurance policy if I move country again?
Local policies are typically limited to residents of the issuing country. Moving again may mean cover lapses or requires re-underwriting under a new policy. International or offshore policies are designed to be more portable but portability is still subject to the specific contract terms and any country-specific restrictions the insurer imposes. Whether a specific policy remains valid on a further move depends on individual policy terms; a regulated specialist can assess this.
Will the proceeds of my life insurance be subject to UK Inheritance Tax?
If a life insurance policy is owned by the life assured and not held in trust, the proceeds form part of the free estate on death and are subject to Inheritance Tax above the nil-rate band (£325,000 as at 2026, frozen to 2031). Where a policy is held in trust, the proceeds are generally treated as settled property rather than part of the deceased's free estate. Trust arrangements carry their own tax charges; the outcome depends on the specific structure and individual circumstances.
UK Inheritance Tax planning for expatsCan an insurer refuse to pay a life insurance claim?
Yes. Under the Consumer Insurance (Disclosure and Representations) Act 2012, where a consumer made a qualifying misrepresentation that was deliberate or reckless, the insurer may avoid the contract and decline any claim. A careless misrepresentation may result in a proportionate adjustment to the payout rather than full refusal. Expat-specific facts such as residency status, country of travel, and occupation are likely to be material to the risk and must be disclosed accurately.
What is the difference between a UK policy and an international life insurance policy?
A UK-authorised insurer's policy is regulated by the FCA and PRA. Complaints can be escalated to the Financial Ombudsman Service and eligible claims may be covered by the Financial Services Compensation Scheme. A policy issued by an overseas insurer is a foreign policy for HMRC purposes, governed by the laws and regulator of the issuing country; UK consumer protections do not apply. Gains on foreign policies may be taxable as income in the UK in certain circumstances, with a time-apportioned reduction available for periods of non-UK residence.
Does writing a life insurance policy in trust remove all Inheritance Tax exposure?
Not necessarily. While proceeds from a policy held in trust are generally treated as settled property rather than part of the deceased's free estate, trust arrangements carry their own IHT charges: an entry charge on transfer, ten-year anniversary charges, and exit charges when assets leave the trust. The effect also depends on the type of trust and whether the settlor retains any benefit. A regulated specialist must assess the arrangement in the context of the individual's full circumstances.
UK Inheritance Tax planning for expats