Foreign National Playbook

3 Mark Financial has the knowledge and expertise to manage your foreign national business, from carrier and product selection; to underwriting and case placement. We have strong relationships with all the major carriers in the foreign national market, and we can help you provide your clients with tax-efficient strategies and benefits that pay in U.S. dollars.

We created this life insurance playbook for foreign nationals to help you understand why a foreign national might need life insurance, the basic requirements, available products, and much more. There is a ton of valuable information to help you find the best solution for your foreign national clients.

General
Insights

3 Mark Foreign National Cyber Chats

3 Mark Foreign National Cyber Chats

Corporate Transparency Act

Corporate Transparency Act

These resources are links to 3rd party websites and you will be leaving 3mark.com. 3 Mark takes no responsibility for the content of these websites. These resources are provided for general education in the Foreign National market.

What carriers are looking for

When approving life insurance for foreign nationals, carriers typically look for financial ties to the U.S.. Your clients need a reason or need to purchase life insurance in the United States, perhaps something that answers the question: “Why does getting life insurance in the U.S. make financial sense?” Are your clients looking for a policy to cover final expenses, or are they looking to provide for their family, etc.? Do your clients want to protect their global assets? Are they looking to reallocate assets? Or own another asset in U.S. dollars for currency diversification?

Here are some common examples that can fulfill the substantial contact requirement or financial ties requirement:

Be in the United States for a purpose other than getting life insurance coverage
Have a U.S. bank account or U.S. brokerage account
Own a real estate property in the U.S.
Have a systematic ongoing business, requiring visits to the country
Are married to a U.S. citizen
Work for a U.S. company in the county
Study in the U.S. as an international student

General Requirements

The reality is that not everyone can qualify to purchase life insurance in the U.S. Besides the health and lifestyle eligibility, a foreign national needs to meet additional criteria. Life insurance companies are trying to keep up with the current world events and often update their guidelines. However, there are a couple of basic requirements, that remain constant, which foreign nationals need to meet, prior to securing coverage:

Be present in the United States during the process (no exceptions) through all 4 steps:
- Quote
- Application
- Medical Examination, if applicable
- Delivery
  - For Foreign Nationals residing outside the U.S., some carriers allow delivery of the policy to an attorney-in-fact who resides in the U.S., such as a family member, using a Limited Power of Attorney form. Rules regarding who may be the attorney-in-fact vary by carrier.
Have financial ties to the United States

Tax Considerations for Foreign Nationals

The U.S. tax code provides many tax breaks when it comes to U.S. life insurance. The biggest one of them is that, generally, the death benefit is income tax-free for the beneficiary.

Under IRC §101(a) of the Internal Revenue Code, most life insurance death benefits are income tax free.

U.S. income tax deferred growth on the inside build up
First in, first out (FIFO) tax treatment of withdrawals
No tax penalties for early withdrawal
Policy loans are not includable in U.S. taxable income

Available policy limits

Many carriers require a minimum of $250,000 coverage for foreign nationals. Please keep in mind if your clients apply for coverage higher than $1,000,000, the life insurance company may require additional financial information.

Maximum face amounts are generally lower in the foreign national space. In some cases, carriers may be able to do as much as $100 M. Consult your 3 Mark sales representative for details.

Available products and coverage amounts

Everyone’s situation is unique. The majority of life insurance coverage options available to U.S. residents could also be available to foreign nationals and non-U.S. residents.

Acceptable visas/residency

When it comes to underwriting life insurance for foreign nationals, carriers would inquire about their current visa and residency status. Many will determine eligibility based on the type of visa, length of stay in the U.S., and many other factors. To more easily explain the different alternatives, we’ve broken down the different categories:

Permanent residents and US citizens (US citizen or permanent resident and living abroad):

Living in the U.S.
Living/working outside of the U.S.

Non-permanent residents (have a visa)

Living in the U.S. (carriers will determine type of visa your clients have, the length of stay, and what their intentions are)
Living/working outside of the U.S. (carrier are looking for financial ties – if your clients are not a U.S. citizen or a person who lives in the U.S., why do they need to have a policy in the U.S.?)

Undocumented (or with an expired visa)

Your clients without a green card (or if their current immigration status is unclear) do have options for life insurance. Carriers would look at several factors. Unfortunately, not every carrier would consider your clients for coverage. The key points are that your clients need to be in the U.S. longer than 5 years and have an SSN or an ITIN.

Will a policy cover clients anywhere in the world?

Carriers would typically like to know about any future travel plans to foreign countries. Some carriers have city restrictions as well. International travel affects your client’s life insurance, so clients would need to be prepared to provide:

duration of travel
the reason (work or pleasure)
countries and cities planning to visit.

Beneficiaries

Clients can name multiple people on the policy or even an entity (e.g. a trust or a corporation). The main thing carriers are looking for when underwriting the beneficiary is whether there is a clear insurable interest. In other words, would they suffer financial loss should you pass away?

Types of documents a carrier might need

Every situation is unique and we can generalize everything. However, these are some of the most common documents or pieces of information companies would need when underwriting life insurance for foreign nationals:

Third-party financial documents
Full name, date of birth
Social security number or ITIN, if your client has one. They would use it as a form of identification; We created a separate guide on life insurance with an ITIN.
A government-issued ID (ID card or a Driver’s license), if your client has one
Copy of your client’s valid passport
Copy of your client’s visa (permanent residency card) and their A-Number
W-8 form
I-94 form
Any other documents, satisfying your client’s financial ties to the U.S. (property deed, financial statements and etc.)
Medical records, translated into English – companies may request a copy of your client’s medical records. It is on a case-by-case basis. However, if your client’s records are from abroad, you would need to obtain them and have them translated into English. A good place to mention is that some companies would be able to review your client’s records if they are in Spanish, with no need for translation.
Cover letter introducing the client

Types of third-party financials a carrier might need

These are some of the third-party financials that carriers may need to consider to financially verify your client when underwriting life insurance for foreign nationals:

Reference letter from a bank
Balance sheet from CPA
Bank account statements
Brokerage account statements
Property tax bills

Payment options for coverage

The premium must be paid in U.S. dollars and drawn on a bank account in the U.S. Some companies require the bank account to be opened for more than 180 days (some companies require 90 days).

All premium payments must comply with applicable OFAC and Anti Money Laundering procedures.

Policy Ownership

Most carriers don’t allow foreign entity ownership of a policy.

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