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Life Insurance for Non US Residents | Approval & Best Practices
Life insurance is very important to own—whether you’re a full-time permanent U.S. resident or not.
If you are not an U.S. resident, but you want to apply for life insurance in the U.S., then you are required to have some tie here, such as an owned business or even a vacation home.
How can I get life insurance if I am not a U.S. resident?
When it comes to life insurance, the term Non-Resident covers anyone who doesn’t permanently reside in the U.S. or have their citizenship.
This includes immigrants new to the U.S., visa holders who are in the U.S. temporarily for work or school, and even Expats – U.S. citizens living abroad.
A non-U.S. resident is defined as an individual who:
• Spends more than six months a year outside of the U.S.
• Visits the U.S. for business or pleasure but maintains a permanent residence outside the U.S.
• Is expected to reside in the U.S. on a temporary basis (ex: an exchange student or individual residing for professional training.)
• Resides in the U.S. on a part-time basis only.
• A person who is an immigrant from a foreign country, residing in the U.S. with intent to stay, but who does not have a green card and has been in the U.S. for less than one year.
Benefits of Owning U.S Life Insurance
While there are quite a few hoops to jump in order to become insured, both non-resident aliens and expats owning life insurance coverage on themselves get many benefits:
• Death benefits are received by beneficiaries generally income-tax free.
• Death benefit amount is not included in the non-resident alien’s taxable U.S. estate.
• If policy has cash value, cash value accumulates tax-deferred.
• Non-resident alien has income-tax free access to the policy’s cash value through loans and withdrawals up to the basis of the policy (the accumulated premiums paid).
Obtaining U.S. based life insurance
There are two main requirements involved in securing U.S. based life insurance as a non- U.S. resident.
The two categories are “connection” and “valid need.”
You must establish a connection to the U.S
Some connections to the U.S. that are generally accepted would be:
• Real estate ownership.
• U.S. based business ownership.
• U.S. estate tax liability.
• U.S. citizen or permanent resident (e.g., green card holder).
• Married to a U.S. citizen.
• Family in the U.S.
• Good prospects for remaining in the U.S. indefinitely.
• Written commitment with your U.S. based employer.
• Student at a University or College.
You must have a valid need for U.S. based life insurance
The following qualify for valid needs:
• Wealth Preservation
• Funding Estate Taxes
• Business Succession Planning
• Income Protection
What to Expect when Applying for U.S. Life Insurance
In addition to the life insurance application and medical exam that is provided by the insurance company, there are additional underwriting requirements that will be required.
Automatic limits of $20,000,000 on individuals residing in acceptable countries may be considered depending on all facts of the case, including the age and health status of the proposed insured, product applied for, the reinsurance arrangement, in-force coverage, and available reinsurance.
The minimum policy face amount for Non-U.S. Residents is $250,000.
If applying for coverage amounts greater than $100,000 the life insurance company will require additional details pertaining to your financials.
This is generally required to justify the life insurance amount being applied for.
In addition to traveling from your home country to the U.S., the life insurance company will require you to complete a travel questionnaire.
Traveling to other countries that are not prohibited by the U.S. can lead to a decline of your request for life insurance
Depending on your responses to the medical question on your insurance exam, the life insurance company may need to order medical records from your doctor.
If records are required, it can slow the approval process. To avoid any lengthy delays we may require your assistance in contacting your doctor’s office to help speed up the request.
HOW YOU PAY
U.S. life insurance companies require that premiums are paid in U.S. currency generally from a U.S. bank account
TYPES OF VISA OR GREEN CARD
A copy of your Visa or Green Card will be required at the time of the application.
Along with a copy of your Visa most applicants will also be required to provide a copy of their I94.
To expedite the underwriting process, be sure to observe the following guidelines and points:
• There should be enough time spent in the U.S. to facilitate information gathering and adequate time to complete the underwriting and policy delivery process.
• ALL applicants must be medically examined. Blood tests and ECGs will be required based on normal age and amount rules.
• Expect delays in obtaining information. Obtaining information on a Non-U.S. Resident applying for insurance may be difficult, but every effort must be made to secure the required information. The closer the ties to the U.S., the better the chances of obtaining meaningful medical and financial information in a timely fashion.
• The maximum special rating class is Class D for Prudential-retained cases
Additional guidelines for individuals associated with the diamond industry:
Additional guidelines apply to individuals associated with the “Diamond Industry” due to increased risk factors associated with the diamond trade (i.e., extensive travel and potential for violence).
In addition to the previously stated foreign residence guidelines, the following also apply:
• Individuals must be employed by/associated with (spouse, family) a major firm in the industry (e.g.,Rosy Blue).
• Only individuals performing the following job functions will be eligible for consideration: office workers in administrative, management or executive functions; graders; gemologists; designers; and sight holders.
• Individuals performing these and similar functions will not be eligible for consideration: cutters; couriers; polishers; and traders.
Documents that residents of China are required to provide
• A copy of their U.S. Consulate exam, if completed within the last two years.
• A copy of financial information presented to U.S. Consulate, if within the last two years.
• Third party financial documentation, regardless of the face amount for which they have applied.
• A copy of the individual’s resident registration card.
Guidelines for Post-Issue Transactions
As is the case with other steps in the new business process, solicitation of an applicant is only permitted within the U.S. borders. In most cases, post-issue policy servicing may not be permitted.
However, there are specific transactions that may be permissible if initiated by the applicant. They include:
• Conversions, including policy, rider, children’s rider, spouse rider, and OPAI with no increase in benefits or amount and no evidence of insurability required. Certain policy and procedural restrictions apply.
• Reinstatements with no medical exams or tests required.
• Flex face amount increases with no medical exams or tests required.
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