I know what you’re thinking. “Life insurance? Check. Already got it. Signed up last week, with a cool $500,000 benefit payable to my kids if I kick off, but that’ll never happen. Hold on there, grasshopper. We need to talk business for a couple minutes. Can you tell me where the documentation for your life insurance policy is right now? Go ahead and dig those papers out, then move them to your safe deposit box when we’re finished up. If you’re killed overseas, the last thing you’ll want is for someone to have to go hunting around for a stack of paperwork in order to file a claim.
Got those papers? Good. Now take a look down there in the fine print. Specifically, look for the words “war zone” or “terrorism”.
Unless you purchased your life insurance policy from a carrier that focuses their business on the specific needs of military customers, you’re going to find what’s called a “war zone exclusion clause” written into your policy. The exact legalese wording will vary, but what the insurance company’s telling you is that if you were in an active war zone or area of conflict at the time of your death, no matter if you were killed by an IED attack or just electrocuted in a shower trailer, your death benefit won’t be paid. And remember, “area of conflict” is a very fluid term. For example, the United States has several thousand contractors and military personnel stationed in Kyrgyzstan, handling logistics for Operation Enduring Freedom. And while Kyrgyzstan is generally considered to be a safe country, remember that circumstances can change in an instant. The Kyrgyz government was overthrown in a matter of days, and the Department of State issued a travel warning and evacuated all non-essential personnel. What does all that mean for you? Your life insurance policy is officially worthless, at least as long as you’re still holding down that day job in Bishkek.
Don’t worry, though: you still have options. I’ll go more into the Defense Base Act in another article, but the least you need to know is that all companies working on government contracts abroad need to carry a minimum of $250,000 worth of life insurance for each employee. That’s the good news. The bad news is that no company’s going to pay out any more than they’re required by law. $250,000 might sound like a lot at first, but if you’re supporting a family then that death benefit will probably only make up for a couple years of your income. Also, there’s no guarantee how quickly the company will pay out, so your next of kin might be looking at a lengthy court battle after you’re long gone.
So what’s the bottom line? If you’re working overseas and supporting a family back home, you’re going to need supplemental life insurance coverage specifically geared towards people who work in areas of conflict. Make sure to do your research on the insurance company through the Better Business Bureau’s website BEFORE you pay any money towards the policy, and tell the sales representative up front that you plan on working in a war zone. I’m not trying to sound like an infomercial here, but you’ll save yourself some time if you start your search with reputable groups like USAA or the AFBA.
The most important thing that you can do before taking on a contract job overseas is to sit down and go over your finances for the worst-case scenario. If you’re a single guy with no bills except for the vehicle notes on your F-350 and matching Harleys, you’re probably good to go without supplemental life insurance. But if you’re leaving behind a family when you go to work, think of it this way: You wouldn’t go outside the wire without a vest, helmet, and gloves, would you? Exactly. Make sure that your family has all the protection they need too.