Life Insurance For Non-US Citizens

Finding life insurance cannot be easy if you are not a U.S. citizen. Most life insurance companies will not offer policies to non-U.S. citizens, and the ones that do often have very high rates. However, there are some ways that you can get life insurance if you are not a U.S. citizen. This guide will discuss your options for life insurance as a non-US citizen!

Can A Non-U.S. Citizen Get Life Insurance?

Life Insurance offers many benefits to the owner and beneficiaries regardless of their citizen status. However, a life insurance policy’s characteristics may assist foreign nationals (non-U.S. residents) with special estate and tax planning needs. This guide will explain how foreigners get life insurance in the USA.

• The proceeds payable under a life insurance policy are not considered a tangible U.S.-based asset and are not subject to U.S. estate taxes for non-resident aliens.
• Benefits payable under a life insurance policy are generally income tax-free.
• In a permanent life insurance policy, any growth in the cash value is tax-deferred. This cash value may also be accessed income-tax-free by the policy owner.

Using Life Insurance as part of the estate plan, a policy owner may provide a tax-free benefit to their heirs to pay any U.S. estate taxes without selling a property.

Also, the policy may provide some wealth transfer to the beneficiary after any tax liabilities are met.

Who is considered a Foreign National?

• Permanent Residents. Green Card Holders
• Temporary Green Card Holders
• Non-Resident Aliens living in the United States Full-Time
• Non-Resident Aliens living outside the United States
• Dual Citizens
• Asylum or Refugee Status
• Temporary Protected Status (TPS)

Can non-U.S. citizens buy life insurance?

The good news is that you can still buy life insurance, although you are not a U.S. citizen. Many non-US citizens might be able to obtain the protection they need for their family’s financial future.

Helpful Tip: Non-U.S. citizens can get health insurance too.

Can I get life insurance if I’m not a U.S. citizen?

Yes, you can get life insurance in the United States even if you are not a citizen, as long as you have the required documents.

As with everything else, there may be roadblocks. For example, your citizenship status may influence which life insurance firms can provide coverage and what further information is required to acquire a policy.

Why should a Foreign National with U.S. connections consider owning a U.S.-based Life Insurance policy?

Permanent Life Insurance

It turns out there are many reasons a permanent life insurance policy may provide:

• Income and estate tax-free death benefits,
• Tax-deferred cash value growth,
• Tax-advantaged distributions
• Liquidity heirs can use to protect assets,
• Estate planning confidence.

Short and long-term benefits are essential for all policy owners, but there may be special tax gains if you hold a life policy as a foreign national.

Term Life Insurance

It turns out there are many reasons a term life insurance policy may provide:

• Most affordable type of life insurance.
• Simple to understand.
• Last for a fixed period, set by you.
• The premiums do not change during the term.

Estate and Tax Planning Considerations

Individuals who are not U.S. citizens but have ties and assets in the United States and those who are U.S. citizens but whose spouses do not need special estate and tax planning considerations should read below carefully.

Did you know that tax regulations may cause your family to owe money to U.S. taxes?

• A person who has never stepped foot in the United States. may be leaving his heirs with U.S. estate taxes to pay if his portfolio included stock in a U.S. Corporation or other U.S.-based assets.
• A surviving spouse living in a foreign country whose husband was a U.S. Citizen may be required to pay U.S. estate taxes on their second home located in Florida (as an example) that they owned at the time of his death.

The Tax Concerns

GIFT TAX

The gift and estate tax marital deductions generally allow for transfer between spouses with no transfer tax consequences. However, there is no unlimited marital deduction for gifts to non-citizen spouses.

Exclusions for lifetime transfers to a non-citizen spouse are limited to $148,000 annually, with an additional lifetime exemption of $5,490,000 (2017 exclusion and exemption numbers).

RESIDENCY STATUS

Non-U.S. citizens who live in the U.S. may be considered resident aliens and subject to income taxes if they have a “substantial presence” in the U.S.

Non-U.S. citizens who have connections or assets tied to the U.S. but do not have a substantial presence may be non-resident aliens.

This test is not always straightforward, and individuals may need to understand whether they could be considered a Resident Alien for income tax purposes.

ESTATE TAX

Non-resident aliens are limited to a $60,000 estate tax exclusion on U.S.–based assets.

As with gift taxes, there is no unlimited marital deduction for estates transferred to non-resident alien spouses unless transferred through a Qualified Domestic Trust (QDOT).

U.S.-based assets owned by a non-resident alien or transferred to a non-resident alien may be subject to the estate tax. Taxes include all tangible property and real estate in the U.S., stocks, and an ownership interest in a U.S. corporation.

Additional Benefits of Owning a U.S.-based Policy

Beyond the life insurance policy’s estate and tax planning benefits, a foreign national may also benefit from participating in the U.S. Life Insurance Market.

• The U.S. Life Insurance market is the most mature globally, which may allow for access to improved product design and competitive product pricing.
• The U.S. Life Insurance industry is highly regulated through federal and state oversight and is considered one of the world’s most stable.
• Also, with the contract and benefits denominated in the U.S. Dollar, a policy may provide financial confidentiality, wealth diversification, and economic security that may not otherwise be available in a foreign market.
• A U.S. Life Insurance contract provides the personal freedom to choose beneficiaries and heirs. As a result, it can avoid the concern of forced heirship for those whose home country requires a specific inheritance.

Regardless of the policy owner’s citizen status, a life insurance policy may also help with many other needs, such as income protection, business succession planning, legacy planning, wealth protection, and executive benefits planning.

Visits The United States Less Than 12 Weeks A Year

A country-resident visitor appears on the list of approved countries and visits the United States for less than 12 weeks each year. The period does not have to be consecutive. The following are the conditions for this visa:

Criteria To Be Met

• Enters the U.S. at least once per year and has an immediate family member, such as a spouse, children, siblings, or parent legally residing in the U.S. Owns property (real estate) in the U.S. Assets must be verifiable.
• Own a U.S. business must be established for more than 12 months.
• Partner of a business in the U.S. has been actively engaged in transactions for 12 months or longer.
• Directly employed by a U.S. company in an approved country, travel to the U.S. for business at least two times per year, with a minimum of 6 months of employment to be considered.
• Investment account in the U.S. (Account must be established for at least a year).

Required Documentation

• Copy of Passport – always.
• IRS Form W-8.
• Cover Letter from the agent indicating a need for life insurance. 
• Copy of U.S. Visa.
• The most recent I-94 form (Department of Homeland Security Records) and Travel History are available for download by the customer at the DHS website.
• Foreign National Questionnaire
• Articles of Incorporation of a business and finances from owners and partners will be requested.

Applying With A Visa

A person whose original country of permanent residence appears on the approved countries list but currently lives full-time in the U.S. under one of the following visas:

• E-1 (Treaty Traders)
• E-2 (Treaty Investors)
• EB-5 (Immigrant Investor)
• H1-B
• H1-C (Foreign Nurses)
• H-4
• K-1
• K-3
• L-1 (Temporary Workers)
• L-2
• O-1
• O-3
• P
• TN
• V-1

All other visa types will be reviewed on an individual consideration basis.

Criteria To Be Met

• Own a U.S. business must be established for more than 12 months.
• Partner of a business in the U.S. has been actively engaged in transactions for 12 months or longer.
• We are primarily employed in the U.S. with one of our accepted visas.
• Investment account in the U.S. (Account must be established for at least a year).

Required Documentation

• Copy of Passport – always. U.S. Social Security (SSN) or Tax ID (ITIN).
• IRS Form W-8 or W-9 Form.
• Copy driver’s license for visa holders (residing in the USA) and U.S. citizens or permanent green card holders living abroad.
• Cover Letter from the agent indicating a need for life insurance. 
• Copy of U.S. Visa.
• Foreign National Questionnaire Form

Applying With a Green Card

A U.S. citizen or permanent resident (green card holder) residing abroad for more than 12 weeks out of the year in an approved country. The 12 weeks do not have to be consecutive. 

Required Documentation

• Copy of Passport – always. U.S. Social Security (SSN) or Tax ID (ITIN).
• IRS Form W-8 or W-9 Form.
• Copy driver’s license for visa holders (residing in the USA) and U.S. citizens or permanent green card holders living abroad.
• Cover Letter from the producer indicating a need for life insurance. 
• The most recent I-94 form (Department of Homeland Security Records) and Travel History are available for download by the customer at the DHS website.
• Foreign National Questionnaire Form

Requirements For All Applicants

• U.S. Bank accounts established for at least six months with activity in accordance with client finances.
• The client must have a U.S. address.
• Premiums must be paid in U.S. dollars via a U.S. bank account. The account owner must be the policy owner and/or the insured. The insurance company will not accept payments from a foreign entity or trust.
• Solicitation and all related sales aspects must occur within the United States.

Unacceptable Applicants

Any public person or Politically Exposed Person (PEP) such as but not limited to:

• Politicians
• Public figures
• Missionaries
• Journalists
• Government leaders
• Military
• Police
• Security personnel
• Judicial personnel

Related Reading

• What is life insurance in Spanish?

Frequently Asked Questions