Life insurance is ideal for everyone irrespective of your citizenship. Are you a foreign national in the U.S and you are worried about your life insurance? How much do you know about getting life insurance for foreign nationals?
Why is Life Insurance Important for Foreign Nationals?
Understanding some of the benefits will help you understand better why you need a cover as a foreign national.
Gain Financial Security for your Family
This is one of the most obvious reasons for taking a life insurance policy. It does not matter whether you are a foreign national or not. It is a reason that applies to everyone. The first thing that a policy offers you is the ability to provide financial security for your family.
Life insurance comes with a good sum of money that you receive which will be passed over to your family in case you die. It is your chance to leave your family a better life once you are gone.
Protect your Assets or Business
If you have a business or assets in the U.S you have a chance to protect them through life insurance. It is a good way to make sure that even when you are gone your business or assets will not be liquidated.
It is simple as all is required is taking life insurance and you can borrow from the cash value to keep your business running.
You can also use life insurance as a way of dealing with estate taxes for those who own properties. The benefits from your life insurance policy can be used to deal with any taxes on your property.
Gain Tax Benefits
Life insurance is different from other financial plans. When it comes to life insurance, you will find it easy since it does not attract any tax. Upon getting the benefits, your beneficiaries will get the money without any taxes being imposed.
Essential Things to Check
The whole process is not as simple as buying life insurance in other normal conditions. When you are a foreign national, then there are a few requirements you have to meet before you can be in a position to make the application.
Your Relation to the U.S is Crucial
Before you can be eligible for any life insurance policy, you have to prove that your relationship to the U.S is right. There are guidelines set in place by the government and insurance companies to follow when offering life insurance.
For you to qualify for life insurance you have to make sure that you are related to the U.S. in one of the following ways.
- You have a spouse who is a U.S citizen
- You are a property owner in the U.S. If you own assets that fall under the estate taxation program, then you also qualify.
- If you are a corporate executive, high net worth individual or a business owner operating within the U.S.
- If you are in the U.S for a certain period of time for work reasons, then you are also eligible. This has to include people like engineers, educators, technicians, medical professionals among others.
If you fall within one of the above groups of people, then you qualify for life insurance.
Are You in the U.S or Not?
Once you have settled your relation with the U.S then the next step is your location when you are applying for the insurance policy. If you are not in the U.S at that moment, then it is not possible to make the application.
If you are in the U.S when making the application, then everything will work well for you. This is because many insurance companies require a foreign national to be within the country when making the application for life insurance.
However, some companies will offer you an alternative which is a limited power of attorney(POA). This is where when you sign the limited POA, you allow the insurance company to deliver your policy to a POA of your choice who can also sign the forms in case you have gone back to your residential country. Then the company will mail the policy to you.
Underwriting Requirements to Expect
It is not a simple process that will take just a few minutes, there is more to expect. There are other requirements you need to know about and prepare for.
Normally, whenever you are applying for a life insurance cover from any insurance company there is a need to provide your financial details.
However, if you are applying for coverage that exceeds $1,000,000 the responsible life insurance company will request you to provide additional details relating to your financials.
This is a step that is used by your insurance company to justify the amount you are applying for
You also need to understand the coverage figures before you can apply for life insurance for a foreign national. You will find out that many companies will require a coverage amount of at least $250,000. This is for people applying for a life cover for either non-residents or foreign nationals.
The maximum, on the other hand, can range between $5,000,000-$1,000,000,000 varying from one life coverage company to the other.
Medical records are required in most cases when people are applying for life insurance policies. Many companies will also conduct a medical exam on you to ascertain your health conditions. The medical exam is mostly in the form of questions and a doctor’s test can come in place as well.
However, all you need to do is get everything ready before this time comes. In most cases, if the life insurance company finds your response to the medical exam not enough, they may require medical records from your doctor.
You can make the process easy by talking to your doctor before you undergo the medical exam. That way, it will be easier to get the records when needed by the insurance company.
Travelling is another concern by insurance companies whenever you are seeking a life insurance policy as a foreign national in the U.S. Many companies will require you to respond to a travel questionnaire.
The questionnaire is part of a step that you have to pass for you to get accepted for insurance. It is meant to ascertain areas you have been traveling. There are areas prohibited from traveling to by the U.S and this can disqualify you.
What Happens When You Go Back to Your Country?
Many people are worried when it comes to buying life cover and they may go back to their countries. Once you have purchased life insurance once you are in the U.S. and you go back to your country, your policy remains intact.
Everything is the same and in case of your death, your family will still receive the benefits.
When You are Disqualified?
There are circumstances under which you will not qualify for life insurance in the U.S. When you know about such instances you will be able to avoid them and prepare very well.
Here is a list of things that may disqualify you.
- Applying without any plans of visiting the U.S.
- Failure to prove a clear relationship between you and the U.S.
- Occupations that disqualify you according to the issuing company
- If you come from countries that are listed with travel warning by the United States
- In case your country is at war
- If your country is facing the risk of political instability, uprising or terrorism.
- In case you come from a country facing endemic, pandemic or epidemic disease or famine.
Main Considerations You Must Make
Here are a few things you should always keep in mind and check out before you buy a plan.
How Much Life Insurance Do You Want to Buy?
This is where you have to decide the size of the insurance you are going to buy. The type of life protection to buy will be determined by several factors. Some of them include your ability to buy it, your residential status as well as your property in the country.
Nevertheless, make sure that you know the amount of coverage you want before shopping.
Get the Best Life Insurance Company
Getting the right insurance company for you is a very crucial step to take. Ensure that you go for a reputable company that will be with you all the way until the end. The best company is one that takes care of its customers up to the end.
Also, make sure that you work with a company that can meet your needs. Feel free to study different companies to arrive at the best one.
Get a Good and Licensed Agent
Should you work with the insurance company directly or get an insurance agent? When you are a foreign national it is always ideal to work with a licensed insurance agent. You may not understand so much about the insurance companies in the country.
At the same time, it may be difficult to go through all the length procedures required when purchasing an insurance policy. As a result, an insurance agent will come in handy to help you out.
Best Types of Life Insurance for Foreign Nationals
Here are the best types of insurance policies you can buy as a foreign national in the U.S.
Return of Premium Life Insurance
It is mostly known as ROP. It is a type of policy that covers you for a specified term. However, it is different from a traditional term life insurance as you are guaranteed a full payback of your premiums.
In most cases, the coverage term takes between 20 and 30 years. In case you pass on within the specified time, your family will automatically get the benefits. However, if the term ends and you are still alive, the insurer will refund you the total premiums you have been paying.
However, it is a more expensive option when compared to a traditional term life insurance.
Term Life Insurance
For this type of life cover, you will be insured for a specified period of time. In the event of your death within the term, then your beneficiaries will get the death benefit.
In case the term expires and you are still alive, you can extend it.
Whole Life Insurance
It is your typical permanent life insurance in which the cover is active until you die. It does not matter how many years you live. The policy will remain active as long as you are paying your premiums.
The main benefit is that for the whole life insurance, you get to accumulate cash value which you can borrow in case of any financial needs.
Life insurance for foreign nationals is an important step to take. By taking life insurance as a foreign national, you get many benefits such as financial security for your family and protection for your assets.
However, it is important to understand all the processes that must be followed when buying a life cover as a foreign national. Make sure that you understand all the requirements before you go shopping for this type of life insurance.