Can You Move Out of the Country and Still Receive Disability Benefits?
The answer depends on what your disability policy says. Many people don’t realize that their disability insurance policy may limit their ability to receive disability benefits if they move out of the country. If you’ve ever wondered why claims forms ask for your updated address, one of the reasons might be that your disability policy contains a foreign residency limitation, and your insurance company is trying to figure out if they can suspend your disability benefits.
Foreign residency limitations allow disability insurance companies to stop paying benefits under your policy if you move out of the country. These limitations may be especially relevant if you have dual citizenship, you want to visit family living abroad, or you plan to obtain medical care in another country. A foreign residency limitation may also affect you if your disability insurance policy allows you to work in another occupation and you have a job opportunity in another country that you want to pursue. For instance, if you are a dentist and can receive disability benefits while working in another occupation, your insurance company may suspend your benefits if the opportunity you pursue is in another country.
Foreign residency limitations benefit disability insurance companies in several ways. By requiring you to remain mostly in the country while receiving benefits, these limitations simplify the payment process and reduce the possibility that insurers will need to communicate with doctors in other countries to manage your claim. They also make it easier for insurance companies to schedule field interviews and conduct surveillance of you to find out if you have done something that could be interpreted as inconsistent with your claim.
While these limitations are not included in every disability insurance policy, it is important to check if your policy—or a policy you are considering purchasing—contains a foreign residency limitation, because it could limit your ability to collect benefits later on.
Foreign residency limitations vary by policy. Here is an example of one foreign residency limitation from a Guardian policy:
Limitation While Outside the United States or Canada
You must be living full time in the 50 United States of America, the District of Columbia or Canada in order to receive benefits under the Policy, except for incidental travel or vacation, otherwise benefits will cease. Incidental travel or vacation means being outside of the 50 United States of America, the District of Columbia or Canada for not more than two non-consecutive months in a 12-month period. You may not recover benefits that have ceased pursuant to this limitation.
If benefits under the Policy have ceased pursuant to this limitation and You return to the 50 United States of America, the District of Columbia or Canada, You may become eligible to resume receiving benefits under the Policy. You must satisfy all terms and conditions of the Policy in order to be eligible to resume receiving benefits under the Policy.
If You remain outside of the 50 United States of America, the District of Columbia or Canada, premiums will become due beginning six months after benefits cease.
This limitation highlights several details you should look for if your disability policy contains a foreign residency limitation, including the length of time you can spend in another country before your insurance company will suspend your disability benefits, whether you can resume receiving disability benefits if you return to the country, and when you will have to resume paying premiums if your insurance company suspends your disability benefits. Another important consideration is the effect a foreign residency limitation will have on your policy’s waiver of premium provision. Under the policy above, premiums will continue to be waived for six months after benefits are suspended. However, your disability insurance policy may have a different requirement regarding payment of premiums, so it’s important to read your policy carefully.
Here is an example of another foreign residency limitation from a different Guardian policy:
Foreign Residency Limitation
We will not pay benefits for more than twelve months during the lifetime of this policy when you are not a resident of the United States or Canada.
This limitation contains much less detail than the first limitation. For instance, it does not clarify how suspension of disability benefits will affect waiver of premium. If your disability policy contains a foreign residency limitation that does not discuss waiver of premium, you should look to your policy’s waiver of premium provision to find out when premiums will become due after disability benefits are suspended. The policy above also defines foreign residency differently than the first policy. At first glance, it may seem that you can continue to receive disability benefits any time you leave the country for twelve months or less. What the policy actually says, though, is that the insurance company will only pay benefits for twelve months that you are out of the country at any time you are covered by the policy. So, if you have received disability benefits for twelve months while living in another country—even if those months were spread out over several years—your insurance company will not pay benefits in the future unless you are in the United States or Canada.
As you can see, foreign residency limitations vary among disability policies. If you are thinking about leaving the country, it is important to read your disability insurance policy carefully first so that you understand how leaving the country may affect your ability to recover disability benefits.