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Living in Chile: From Opening a Bank Account to Finding a Decent DoctorChile continues to be a very popular destination for Sovereign Man: Confidential subscribers, thanks to its straightforward residency process, its great weather and its first world amenities, among many other reasons.

And since most of the Sovereign Man staff, including Simon, is based in Chile, we have a deep and broad base of experiences from which to draw on and share with you.

Today we return to our series of case studies, this time featuring a family of four who moved to Chile a little more than two years ago.

The coast near Zapallar, Chile

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In Part One of our Chile case study miniseries, we took a big picture view of the country. We explored reasons to choose Chile, places to live, and logistical aspects such as shipping belongings from your home country. We also briefly covered various aspects of the educational system, as well as some of the safety concerns that someone moving here might have.

In the second part of the series, we continue the story of Mark and Natalia, who generously share their first-hand experience of living in this beautiful country.

Here, through the lens of Mark and Natalia’s experience, we’ll look at the country’s medical system, explore how a newcomer can open a bank account, and take a peek at what it’s like to purchase a car here. (Hint: Toto, we’re not in Kansas anymore.)

Medical care in Chile Affordable and high quality medical care can make it or break it when considering a country to relocate to.

Even if you are not planning to move to Chile permanently, you will need to spend at least several months there while applying for your permanent residency. There is a good chance you may need to use some of the local medical facilities during that time.

Chile is an example of a country that offers a good combination of both public and private options, so you can choose a provider according to your needs and resources. You can, as a foreigner, opt into a public option, should you choose to do so.

1) FONASA (Fondo Nacional de Salud)

FONASA is a public healthcare option. And it’s a popular one: As of 2103, some two-thirds of Chileans were signed up with FONASA.

FONASA was organized in 1979 and is funded by contributions paid by employers (equal to 7% of employee’s monthly income).

If you do not have a job or income in Chile, you may pay nothing and still be covered by FONASA. That means you’d be able to receive medical attention at any public hospital or health center. You don’t even have to register with the program initially.

The main problem with it is that users of 100% free FONASA can ONLY seek care at public facilities. They’re not able to utilize private facilities at FONASA’s discounted rates (more on that below).

Again, FONASA is an option if you have a job in Chile.

But if you are self-employed in Chile, you’ll need to register with FONASA yourself. Your contribution would still be 7% of the total income that you declare. If you register with FONASA, you will also need to register with AFP – the Chilean national pension fund, which will require an additional contribution of ~11%.

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Mark is currently using the self-employed option and declares an income close to the minimum allowed. He pays about 17,500 CLP (~ $26) per month for FONASA and 30,000 CLP (~ $45) per month for AFP. This covers the entire family – Mark, Natalia, and their two kids.

Mark and his family are in good health, so there have only been a few instances when they had to seek medical attention.

Public facilities definitely lack the resources - and the level of attention - that the best private facilities offer in Chile, but Mark’s experience at a public clinic in Santiago was reasonable, even when compared to care received in New Orleans, where Mark’s family lived before relocating to Chile.

In Mark’s opinion, FONASA insures against serious injury or a catastrophic event if you are a healthy individual with no pre-existing conditions.

In addition, Chilean doctors in the public sector typically graduate from the same universities as their colleagues from private clinics, therefore their English proficiency is reasonable. Natalia is not proficient in Spanish and communicates in English whenever she goes to visit a doctor at a public clinic in Chile.

Today, whenever possible, Mark prefers to use private facilities, mostly due to their more convenient locations and speedy service. Using his FONASA insurance, he typically receives significant discounts.

Chilean countryside

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For example, recently, Mark went to have his vision checked. Integramedica, the network of private medical facilities in Chile, charges 44,000 CLP (~$65) for walk-ins without any insurance. But presenting his FONASA affiliation paper, Mark only had to pay 12,150 CLP (~$18).

While FONASA is the most common choice of lower income and middle class Chileans, Mark knows some wealthy families (particularly those with multiple children) who also use it… and who do not plan on switching.

Things may change in the future, but for now, Mark doesn’t feel any need for his family to switch to private insurance.

2) ISAPRE (Las Instituciones de Salud Previsiona)

ISAPRE is a class of private medical insurance in Chile, used by a little less than a quarter of the population.

Most expats choose to contract with private insurers here.

And indeed, private medical care can be impressive.

Clinica Alemana and Clinica Las Condes are considered the best clinics in Chile and constantly rank very high in various studies of South American hospitals. Attention is excellent there and facilities are extremely modern. (Simon’s own sister sought care there during her

Chilean Patagonia

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pregnancy and raved about her doctor, as well as the facilities, which trumped many she’d visited in the US.)

FYI – a private hospital is called a “clinica” in Chile, whereas a public clinic is always referred to as a “hospital”.

There are an array of clinics in Santiago that offer excellent service for less money than the two listed above. Clinica Indisa or Clinica Santa Maria (among others) are great examples of a much better quality-to-price ratio.

Mark thinks that Clinica Alemana may be compared to a very expensive brand of wristwatch, where one is mostly paying for the name and prestige, but gets the same time and date information.

That said, as a counterpoint, Simon’s sister visited Clinica Santa Maria for a checkup. Although she liked it and found the care to be thorough, she still felt that she would have better — and much more efficient — care at Clinica Alemana, which also offers free checkups to babies born there for over their first two years of life.

Whichever way you go when choosing your ISAPRE insurance, you are usually able to pick the clinic of your choice as your primary health care provider.

There are several private insurance companies to choose from, and each of them offers a variety of different plans you can pick.

Fortunately, there are many private insurance brokers who can help you choose the best private insurance plan that suits your needs. One of our the Sovereign Man team members has used such a broker in the past and was happy with her services.

We reached out to Marcela (the above-mentioned broker) over the phone to ask some additional questions, and we found her to be very pleasant to deal with and very professional.

She provided us with a few quotes for an imaginary family of four, aged 44 (father), 39 (mother), 10 (son) and 5 (daughter). According to this request, the mother also had a preexisting condition of diabetes (all preexisting conditions need to be disclosed in Chile when contracting an ISAPRE).

Marcela recommended a great value deal from COLMENA insurance company with Santa Maria Clinic as the primary healthcare provider. Monthly payment for this option was 165,000 Chilean pesos for the entire family (~$240). Certain deductibles typically apply, and in this case the family would have paid about 10% of the entire price for most of the services.

Another quote for a very similar plan — but this time with Clinica Alemana (the most luxurious clinic in Chile) — came with the monthly premium of 258,000 CLP (~$385).

In case if you decide that private insurance is the way to go, feel free to contact Marcela Tuteleers Celis at marcat@asesoriaisapre.cl or +56 9 8933 6500. She will be happy to help you choose the right plan for your situation.

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We can personally affirm that Marcela’s English proficiency is adequate, and that you should not have any communication problems with her.

Of course, when you do go in for services, wherever that may be, you’ll have to find a way to pay them. And that is made much easier with a Chilean bank account.

Banking in Chile

Let me start out by saying that Chile is NOT an international banking destination. In fact, it is very far from it.

Opening a bank account here can be an extremely laborious and frustrating process, not only for a foreigner, but even for a local Chilean citizen.

In fact, Mark was perplexed by how easy it was to obtain legal residency in Chile for him and his family, but how extremely difficult it was to open a bank account.

Here is how the process of opening a bank account went for them. Consider it a template for how it goes for most foreigners arriving to Chile:

1) Upon arrival, they used foreign cards and ATMs only

When Mark and Natalia first arrived to Chile, they were not allowed to open any kind of bank account, because they were not yet Chilean residents.

However, the good thing is that foreign credit and debit cards are widely accepted in stores and restaurants in Chile. But the picture changes drastically when shopping online – only Chilean cards are accepted for online purchases.

2) Four months after their arrival, they obtained a Cuenta Rut.

After spending about four months in Chile, they were granted their temporary residency and therefore were assigned RUT numbers (the national taxpayer ID).

With a RUT number, they could get a very basic “Cuenta RUT” account in state-owned Banco Estado. With that account, they also receive a basic debit card that can only be used in Chile.

There are a number of limitations associated with the RUT account. You cannot make an online purchase larger than 200,000 CLP (~US$ 350). You can never have an account balance larger than 3,000,000 CLP (~US$ 4,500) at any moment in time.

Nevertheless, Mark found the Cuenta Rut a great option for paying utility bills online (and not having to go to the bank every time), and for making smaller purchases online.

Getting an exemption from Obamacare

Please note that US citizens living abroad for more than 330 days a year are considered bona-fide residents of foreign country and can apply for Obamacare exemption.

To do that you will need to file a form 8965 with you tax return.

Here are the instructions to the form for your reference.

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3) After two years in the country, Mark and Natalia opened a proper checking account.

After two years in Chile, Mark and Natalia obtained their permanent residencies. With it, they were able to apply for a regular checking account (Cuenta corriente).

But even with a permanent residency in hand, opening a checking account is far from guaranteed. Banks in Chile will consider opening this type of account ONLY if you have income generated in Chile.

Fortunately, Mark and Natalia already owned a piece of commercial property in Santiago that they rented out. Using that income, they were able to qualify for a bank account in Banco Itaú (a Brazilian bank operating in Chile).

Banco Itaú seemed to be a little less conservative than traditional Chilean banks such as Banco de Chile or Banco Estado.

As you see, opening a bank account in Chile can be quite challenging.

But there is a positive side to that as well – once you are “in the club,” your new Chilean bank account becomes a valuable asset. Chilean banks are liquid, well capitalized and conservatively run – qualities you want to see in the bank where you entrust your money.

Valparaiso, Chile

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Opening an account with Santander Select.One exception to the rule could be opening a Select account with Santander – the largest bank in Chile. Santander Select is a premium account offered to the higher-net-worth individual clients.

Santander will consider opening an account with Select status if you:

a) Have at least temporary residency status in Chile, AND

b) are willing to make an investment of about US $140,000 in a mutual fund or term deposit with Santander. The good part is that you can withdraw the money shortly after your account is open.

They will also require you to prove the legality of your money’s origin. Documents showing the sale of the property work. as do tax returns from the last 3 years or so.

Also, it’s worth noting that Santander Select’s requirements frequently change… those listed here may not be valid next year… or even next month.

Once you are in Chile, and once have your temporary residency in place, you can reach us at clients@sovereignman.com. We will introduce you to an executive of Santander Select who will be able to advise you about the latest requirements, and who will walk you through the account opening process.

I can imagine you wondering – “If it’s that hard to open a bank account in Chile, how on earth can I bring the money to the country to buy a property or a car? Bring cash?”

Frankly, that’s one of the options.

Just remember that the official reporting threshold in Chile is $10,000 if you’re bringing money in that way. And make sure to provide all supporting documents demonstrating that the money was legally earned.

Bringing physical cash was exactly what one of the Mark’s acquaintances did to buy a few condos in Santiago.

But there is also a much more elegant solution that Mark himself has explored to enter money into Chile.

The local investment company LarrainVial is basically a local broker that opens investment accounts for foreigners. There are no opening minimum requirements, and no Chilean residency requirements either. The only thing LarrainVial asks is that you have a valid RUT number (a temporary one works as well – see below on how to obtain it).

Opening an account with them is easy and takes just a couple of days. Moreover, you are

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assigned a personal account manager that you can talk to at any time. Mark says his manager speaks English and generally has been extremely helpful.

An account with LarrainVial is more of a brokerage account than a banking one – there are no cards or checkbooks associated with it.

After Mark’s account was open, he was able to wire money to Chile via LarrainVial’s account in Citibank New York (LarrainVial also works with Euros).

Your manager will ask you to fill out a simple form explaining the purpose of the wire.

Because Mark’s dollars were going from his bank account in the US to LarrainVial’s account in New York, all of his wire transfers were classified as domestic. In general, three or four hours after he’d make a transfer, his manager would call him to inform that the money had arrived, and would ask what to do with the funds.

You don’t have do to anything with them, of course. You may leave your money sitting there in USD, or you may choose to convert them to pesos.

Because LarrainVial in an investment company and wants your money to be invested with them, at some point, they will likely pitch you some of their investment instruments.

Remember that investing with them is by no means an obligation – you may just choose to keep everything in cash until you are ready to withdraw your money for daily use or make a purchase.

National Park La Campana

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In that case, just email or call your manager to learn about the options on how to proceed.

Mark says that he exploited several different options: 1) LarrainVial wired money to other people’s accounts within Chile; 2) the broker issued money orders; and 3) the broker even distributed pesos and dollars to Mark in cash.

Mark currently holds his remaining balance with LarrainVial invested in some very low risk instruments that the company offers.

To summarize, LarrainVial will not replace the proper checking account for you, since they are not a bank and are not supposed to perform banking operations routinely, but Mark had no issues asking them for a favor once a month or so.

If you have your RUT number in place and are ready to open your account with LarrainVial, feel free to contact them via filling this form or calling +56 (2) 2339 8500.

If you have any problems finding someone who speaks English, reach us at clients@sovereignman.com and we will put you in touch with our English-speaking account manager.

Obtaining a temporary RUT number in Chile.To be able to buy a car or property in Chile, you will need to obtain a RUT first – national Chilean ID number.

You will get it automatically after your temporary residency is approved (3-5 months after you apply).

If you want your RUT before then, to be able to buy a property or car, you may apply for so-called provisional, or temporary, RUT.

Until recently, it was easy to get one just by applying personally at any local tax office, but recently the process has become more complicated – a local guarantor is now required.

The guarantor can be a Chilean person, or any expat, with at least permanent residency in the country.

And if you don’t have anyone here to vouch for you yet, we will be able to assist.

Our legal provider of choice here in Chile will do it for a fee of US$200.

Please contact:

DELLA MAGGIORA & EYZAGUIRRE ABOGADOSFrancisco della Maggiora fdellamaggiora@dmey.cl

+56 (2) 2499-5990

www.dmey.cl

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Buying a carAnother major issue Mark and Natalia had to solve was one of transportation. Although there is a decent metro in Santiago, getting around — and leaving Santiago — is made far easier with a car. Unfortunately, it’s very expensive to bring a car into the country, and local rules make it difficult to garner entry. And although it’s far cheaper to purchase a car in Chile than to import your own, vehicles are generally more expensive in Chile than they are in the US.

For example, a brand new Toyota Corolla would cost you 12,590,000 CLP in Chile (US $18,600). Comparable trim in the US would be at least US$1,000 cheaper.

Luxury cars are noticeably more expensive in Chile than in the US.

Gas prices are much higher here as well – one gallon of regular gas in Chile costs around US$3.5 at the moment.

Diesel is subsidized and is substantially cheaper. (And is one reason for Santiago’s air pollution.) It can be purchased for around US$2.2 a gallon in Santiago today.

If you are planning to rack up a LOT of miles in Chile — and it’s a long country, so if you’ll be exploring everything from the Atacama desert down to Patagonia, you will be driving a lot — you may want to look into diesel cars. The problem is – diesel cars are at least 10-20% more expensive than regular gas ones.

Recently, Mark and Natalia decided to purchase a regular gasoline-powered car, since they only needed it for short errands a few times a week, plus for the odd weekend trip outside of Santiago.

We asked them to outline the process they went through of buying the car. (Note that they bought a used one from a private party, so the entire process will likely look a bit different if you buy one from a dealership.)

Automatic transmission was “a must,” though, since after driving for several years in the US, Natalia was not comfortable with manual transmission any more. Unfortunately, that significantly decreased the pool of available cars: Automatic transmissions are harder to come by in Chile and account for only around 15% of all cars sold in the non-luxury segment.

First, Mark and Natalia did some thorough research of all the cars available on the following websites: Chileautos.cl (dedicated to vehicles only) and Yapo.cl (where you can buy and sell anything).

They wanted to make sure that they were buying a reliable car that people are happy to own, so they picked a car that is also sold in the US.

They also discovered just in time that vehicle history reports are available in Chile, similar to the American Carfax. The service they used for this purpose was called Autofact in Chile.

It takes only US $8, and the car’s license plate number, to get started with the report. (License

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plates are assigned to cars in Chile and don’t change with each new owner.)

Data in the report are collected from various government and private databases; the report becomes available almost instantly.

The report shows the list of previous owners, whether the vehicle has ever been in a serious crash, the mileage recorded during mandatory annual inspections, and much more.

Mark contends that the information gathered in the report is publicly available and can be accessed for free by anyone from various sources IF they know where to look. But that takes a good deal of effort and time.

So considering the price, buying that report was a no-brainer for Mark. And it saved him some huge headaches: A Honda Fit that was selling for an excellent price turned out to have recently crashed.

Eventually, Mark and Natalia ended up buying a 2010 Kia Soul with 60,000 km on it for 6,400,000 pesos (US$9,500). So far, they are happy with their choice.

The entire process looked like this:

1) Mark found a car using Chileautos.cl and Yapo.cl

2) He went to test-drive the car

3) That same evening, he ordered the Autofact report and negotiated the price with the seller over the phone.

4) The next day, Mark went with the seller to the Registro Civil – the government office where, among other things, car sales are publicly recorded and titles transferred.

All in all, including a trip to nearby bank to pay the government transfer fees (about 2% of a car’s price) and to make a money order to pay the seller, the entire process that day took about an hour and a half.

5) After completing the required procedures at the Registro Civil, Mark drove the car back home.

Looking back, the entire process was not excessively difficult, nor was it time consuming. (Mark does speak Spanish, though).

Buying a car (even a used one) in a dealership would be definitely a little more expensive, but the entire process would likely be even easier and more transparent.

Receiving your US Social Security benefits in ChileWhile Mark and Natalia are too young to receive any social security benefits, some of their expat friends who live in Chile are eligible for Social Security and do collect it.

If you moved to Chile and are eligible for Social Security benefits, your first step would be

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to visit the US embassy. They will contact Social Security Administration to identify your eligibility and will print a letter in Spanish to take to a local bank to set up an account.

The US embassy has an agreement with the following two Chilean banks who accept Social Security deposits – BCI and Banco Estado.

Natalia’s American friend has her social security benefits direct-deposited to her BCI account every month. She says the process took a few weeks to complete, but generally was not too difficult.

Chile and the US have a special agreement in place to avoid double taxation of social security benefits – your money will not get taxed the second time in Chile.

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There is a great deal to consider when moving to another country. So far, we’ve covered where to live in Chile, how to transfer belongings here, how to open a bank account, choose health coverage, purchase a car, and educate your kids.

But we’re not done with Chile yet.

In our next installment in this Chilean series, we plan to cover the naturalization process (which one of our staff members just underwent). We’ll also share Mark’s and Natalia’s opinions on Chile’s strong and weak points are, as well as other tips for living here.

And future case studies also will explore living in places such as Peru and Budapest.

We look forward to sharing more expat perspectives with you, so that you may make your best and most informed decision on moving abroad.