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U.S. Life Insurance for Wealthy Foreign Nationals
We wrote this article as a companion to our Life Insurance for Non U.S. Residents. This article specifically addresses U.S. life insurance for affluent foreign nationals (those with a high net worth of $5,000,000 USD or more), including the requirements and procedures. The key component is to apply with the right company from the start. We review dozens of top-rated life insurance companies offering the best life insurance options in the United States.
People from many nationalities spend ample time in the United States throughout the year. They invest their time, money, and more importantly, build part of their lives in the United States. If this is you, then you may have wondered if you are eligible for a life insurance policy issued in the United States. Guess what? You very well may be.
Life Insurance for High Net Worth Foreign Nationals
If you are not an American citizen, but regularly spend time in the United States you may be eligible for an American life insurance policy. While not every U.S. life insurance provider offering life insurance policies to foreigners has the same requirements, this set of guidelines may help you to get a good idea as to who may qualify.
- How much time to you spend in the United States every year? Most life insurance companies will require that an expatriate is physically present in the United States a minimum number of days each year to qualify for a policy. For many life insurance providers, that number of days is around 15 days or more.
- How much time do you spend outside of the United States every year? Most life insurance policies specifically for foreigners also require that you do not reside in the United States. To demonstrate that you do not reside in the U.S. life insurance companies often require that you prove that you do not stay here more than 183 days (six months) per year. In other words, you must be outside of the United States for at least half of the year.
- What is your purpose of travel to the United States every year? If you simply take an annual trip to the United States for a leisurely holiday, then you may not necessarily qualify for a life insurance policy offered by a US-based life insurance company. That’s not to say you cannot take vacations in the US—you can—but you will eventually need to prove that you have real ties to the United States to qualify for a policy.
- What is your tie to the United States? Although you are not an American citizen, you should be able to prove that you have legitimate ties to the USA that set you apart from mere tourists. In most instances, this connection will be a financial one such as:
- Being a US business owner or key investor in a US business
- Being employed by a company in the United States
- Owning real estate in the United States
- Regularly paying taxes in the United States
If you have no financial ties to the United States, then it will be difficult to qualify for a foreign national life insurance policy. Some life insurance companies may additionally require that you prove to have immediate family connections in the United States.
- What is your total net worth? It is quite common for a life insurance company to ask a foreign applicant to disclose their net worth. Many life insurance companies offering coverage to high net worth individuals will only offer policies to foreign nationals who have a substantial total net worth—somewhere in the range of $5 million USD or more. This figure represents your total global net worth—not just your stateside investments.
Reasons to Buy a US Life Insurance Policy as a Foreign National
Many non-resident aliens wonder if there is an advantage to buying a life insurance policy in the United States. After all, the country of your nationality may offer valuable life insurance policies as well—so what’s the purpose of buying a life insurance policy in North America? There are a few reasons why buying a life insurance policy in America may be in your best interest.
Your U.S. life insurance policy:
- may not be subjected to certain US taxes.
- Life insurance generally is not considered U.S. property and therefore, will most likely not be subject to taxes.
- For resident aliens, the use of an irrevocable life insurance trust would need to be utilized in order to avoid estate taxes. However, non-resident aliens would not be subject to an estate tax.
- can help you protect your family members from possible debt obligations
- may help with business succession and transactions that will need to take place after your death
- can provide your family with a future income
- Works better than a Qualified Domestic Trust (QDOT), which only defers taxes until the death of the surviving spouse.
There are just a few reasons why buying a foreign national life insurance policy in the United States may be in your best interest.
Foreign National Business Owner U.S. Life Insurance
For affluent foreign nationals that own a business in the United States, there are a few planning decisions involving U.S. life insurance that should be considered:
- Do you have an existing business succession plan, such as a buy sell agreement? Life insurance is a great way to provide the necessary cash to fulfill the requirements of the buy sell.
- Is your business a sole proprietorship, S Corp, LLC, or C Corp? If so, you may need to consider key person life insurance for you or an employee.
- Foreign nationals owning property or businesses in the United States should consider Indexed Universal Life Insurance.
No matter where you reside if you want to apply for a US life insurance policy, then it is likely you will have to do the entire procedure in the United States. There may be a few life insurance agencies willing to process your application online while you are out of the country, but don’t bank on it.
Does my country of citizenship matter to the life insurance company?
Every life insurance company has its unique criteria, including whether or not an applicant’s country of citizenship matters. However, it is quite likely that a life insurance company has different eligibility requirements for citizens of different countries. For example, some life insurance companies may require citizens from one country to have a greater net worth than citizens of another country.
A life insurance agency may also have different maximum issue ages for people from different countries. One reason for this is because countries have varying life expectancy averages, and this matters to a life insurance company. Citizens of Nepal, for example, have a significantly lower life expectancy than citizens of Finland. Because life insurance companies are in the business of life and death, they will take these statistics into consideration.
Will my occupation matter?
Whether or not you are a citizen of the United States of America, a life insurance agency will almost always ask you about your profession because each profession has its unique associated risks. A politician, for example, has different risks than an investor. Your occupation may impact your life insurance eligibility and the rate you pay.
Will my life insurance policy still be valid no matter the country I ultimately die in?
This is a good question, especially for foreign nationals who likely travel often. Many life insurance plans for foreign nationals have restrictions depending on where you meet your demise. Some life insurance companies follow US-issued travel alerts—if the United States has issued a travel alert for a certain country, and you still travel there and die, your policy may not be active. To know where your policy will be valid, you need to speak with your specific life insurance provider.
Will I have to disclose all of my global net worth information?
You will have to prove that you have the net worth required for life insurance eligibility. Beyond that, you will not have to disclose all of your personal financial information.
Do all life insurance companies offer policies for foreign nationals?
No, they do not. Companies offer different types of life insurance policies for different needs, which is why not all will offer policies for people who are not citizens of the United States of America.
How do I know which U.S. life insurance companies offer foreign national policies?
You can spend a lot of time on the internet and get a good idea of which life insurance agencies offer foreign nationals policies. However, more importantly, you need to know which life insurance agencies will offer you a policy. The easiest way to do that is to speak with an expert in the industry, and TermLife2Go is that expert.