How to Get Life Insurance for Non-US Citizens
Life insurance can be an important tool for protecting your family and loved ones when you die. Depending on the type of life insurance, it can also be an asset in your overall portfolio. But can life insurance purchased in the U.S. help you as a foreign citizen? It’s clear why international health insurance is so important to people living outside their home country. You may also already know the benefits of international life insurance. But there are particular benefits to holding U.S. life insurance as a foreign national. Read on to learn about the benefits and drawbacks, as well as how to secure life insurance for foreigners in the U.S.
Do You Have to Be a US Citizen to Buy Life Insurance?
In short, no. It’s a little trickier to buy life insurance for immigrants, but if you meet all the requirements, it’s absolutely doable.
There are several types of foreign nationals who choose to live in the United States either temporarily or permanently. Which of these you are will affect whether or not you can secure life insurance, or might make it easier or harder to get it.
Life Insurance for Permanent Residents or Green Card Holders
If you are a permanent resident of the U.S., it means you’ve obtained your so-called “green card” to establish permanent residency. While this status is not the same as citizenship, permanent residency comes with many benefits. One of these benefits is that most insurance companies will be willing to work with you on life insurance coverage. The main thing to keep in mind is that some companies require at least two years of permanent residency before they will cover you. Check the company’s policies carefully if you are in this category.
A note that some green card holders are “conditional residents,” sometimes known as “temporary green card” holders. This type of green card expires after two years, and requires extra steps to get full permanent residency. Given the two-year rules many insurance companies have, people with conditional residency may need to go a different route when seeking U.S. life insurance.
Can You Buy Life Insurance Without a Green Card?
Yes, with certain restrictions. The question of life insurance for non-permanent residents is an ever-changing one, too, so it’s important to do your own research and talk to different companies to see if you qualify.
There are several different types of visas that foreign nationals obtain to visit the United States for extended periods. What kind of visa you have will impact whether or not you can obtain U.S. life insurance. Some of the most common examples of visas are:
- B-2, a visitor visa
- E-2, for investors
- F-1, for academic or language students
- H-1B, a temporary visa for specialized workers
If you are in the United States without a visa, purchasing life insurance will be more difficult. However, it’s not impossible for someone with asylum or refugee status, or even an undocumented immigrant, to purchase life insurance in the U.S. While many companies will not insure someone without a valid visa, and the coverage you can get may be limited, it is now possible to get term life insurance up to $100,000.
The most important factors in this case are:
- Amount of time in the U.S. — you must be in the country for at least five years
- SSN or ITIN — you must have an identification number that the U.S. recognizes
- Income — you must have some income in the United States
- Country of origin — some countries will not permit you to buy life insurance in the U.S.
See Also: The Importance of a Life Insurance Review for Expats
Why Get a US Life Insurance Policy as a Foreign National
The most common reasons for a foreign national to purchase life insurance in the U.S. are either to cover or reimburse what are called “final expenses” in the event of their death, or to make sure their families are provided for.
Some foreign nationals have built lives in the U.S. with spouses and children. Others take out policies on themselves to protect family members in their home country if they die unexpectedly. Still others wish to purchase life insurance for their undocumented parents, to help carry out their final wishes if they die while in the States.
Other reasons are more directly financial. A foreign national might not be able to get life insurance in their home country. The political and economic situation there may also be less stable than in the U.S., where the U.S. dollar is still one of the world’s leading currencies. Or they might simply want to protect assets they hold in the United States.
How Life Insurance Works for Foreigners in the US
Whatever your personal reason for wanting to secure life insurance in the U.S., you’ll need to decide whether you’re looking for term life insurance or whole life insurance. Each of them has different advantages and drawbacks.
Term Life Insurance for Foreign Nationals
Term life insurance is so called because it lasts for a fixed term (usually 10 years). Often, people buy it when they have a lot of expenses, such as a mortgage, and don’t want to leave their families unable to pay if they die suddenly. These types of policies are less common for foreign nationals in the U.S., but they do have some perks.
Term life insurance is the most affordable type, for one. Its purpose and how it works are also fairly easy to understand. It lasts only as long as you want it to. And the premiums stay at the same rate for that entire period. All of these things could make a term life insurance policy attractive to you as a foreign national in the United States.
Whole Life Insurance
Permanent or whole life insurance is just what it sounds like – a permanent policy that lasts for the duration of your whole life. Whole life insurance is significantly more expensive. A whole life insurance policy pays out upon your death just as a term life policy does. However, it also retains a cash value that grows over time, and which you can take advantage of as a financial instrument.
Whole life policies also carry several advantages for non-citizens in the United States. Death benefits are free of both income and estate tax. The cash value of these policies is tax-deferred, and any distributions you take from them are tax-advantaged. And as a foreign national, you may enjoy special tax gains if you hold a whole life policy.
Requirements for Securing a Life Insurance Policy as a Foreigner in the US
There are two basic requirements if you want to buy U.S. life insurance as a non-U.S. citizen.
First, you need to show that you have strong enough financial ties to the U.S. to make it make sense. Perhaps you are running a business based in the States. Or maybe you’re married to a U.S. citizen. You might have ongoing business in the States that requires regular trips or long stays, or you’re studying in the country on a student visa.
Second, you must be present in the United States during the application process. This includes getting a quote, completing the application, getting a medical examination (if required), and receiving the policy.
You’ll also need to provide some paperwork in order to apply, which may include:
- Documentation of your visa or immigration status
- A completed foreign resident questionnaire
- Includes basic questions about your health, work status, and history of your time in and out of the USA
- Personal identification form (ID)
- Forms of ID can include Social Security Card, ITIN, or a W-8BEN from the IRS (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting)
- Forms to confirm residency in the specific US state where you live
- These can include tax or residency documents
- This is not required by every insurer and depends on the company’s requirements and your state of residency where you apply.
Often, medical exams are required and must be performed in the U.S. You will also typically need to have a US bank account to pay your premiums from.
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Does a life insurance beneficiary have to be a US citizen?
In short, no. If a life insurance company allows non-US citizens to buy policies, they also will usually allow the named beneficiary to also be a non-citizen. The most important factor in naming a beneficiary is that they have what’s called an insurable interest.
Having an insurable interest simply means that the person would suffer a financial loss if you died. For example, say you immigrate to the United States to work, and you’re sending money home to your mother. Your death would cause her financial hardship from the loss of income as well as your final expenses.
It’s easier to collect a life insurance benefit if you are in the United States. However, if your named beneficiary lives outside the U.S., there are options for making it work. It’s important, for example, that you have as much accurate information about the beneficiary listed in the policy as possible, so the company can find them and verify their identity. If you believe your beneficiary would not be able to come to the States to collect their benefit in the event of your death, talk to your insurer about how best to protect them and their interest should something happen to you.