Where one lives while in Panama for example (7)

I believe the answer is:

habitat

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'where one lives' is the definition.

'while in panama for example' is the wordplay.
'while' becomes 'abit' (I can't justify this - if you can you should give a lot more credence to this answer).
'in' is an insertion indicator.
'panama for example' becomes 'hat' (Panama is a type of hat).
'abit' placed within 'hat' is 'HABITAT'.

Can you help me to learn more?

(Other definitions for habitat that I've seen before include "Usual abode" , "Shop founded by Terence Conran" , "Natural environment (of creature)" , "Natural home and surroundings" , "Natural home of wildlife" .)

I've seen this clue in The Globe and Mail.

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