Foreign nationals with ties to the United States have many reasons to consider U.S.-based life insurance policies in addition to ensuring financial security for their loved ones. The stable and reliable U.S. insurance market provides confidence and convenience, especially for those with international assets. As the largest insurance market in the world, U.S. carriers offer a broader array of products. At the same time, the breadth of offerings and carriers also leads to more competitive pricing than in other markets. 

In this article, we’ll look at several considerations foreign nationals and their advisors should consider when seeking life insurance coverage.

Who counts as a foreign national?

Generally speaking, the U.S. government considers anyone not a U.S. citizen to be a foreign national. When underwriting a life insurance policy, carriers typically look at foreign nationals who fall into one of two IRS classifications– resident or non-resident aliens.

Resident alien: A resident alien is an individual who meets either the "green card test" (having lawful permanent residency) or the "substantial presence test" (being physically present in the U.S. for at least 31 days in the current year and 183 or more days over the past three years). Resident aliens are taxed like U.S. citizens, report worldwide income, and are eligible for the same deductions and credits. 

Non-resident alien: A non-resident alien is an individual who does not meet the criteria mentioned above and is typically subject to different tax rules. They are only required to report and pay taxes on U.S.-sourced income or income effectively connected with a U.S. trade or business. Certain types of income, like interest, dividends, and capital gains, may be subject to withholding tax.

The underwriting process for foreign nationals

Every carrier has its own underwriting policies and requirements, but insurance carriers will generally look at the following when determining coverage and rates for a foreign national:

• Documentation and Identification: Insurance companies typically require different forms of documentation for resident aliens and non-resident aliens to verify their immigration status and residency. For example, resident aliens may need to provide their green card or proof of lawful permanent residency. In contrast, non-resident aliens may need to present evidence of their nexus to the U.S., like business or real estate documents.
• Duration of stay: Insurance companies may inquire about the length of time foreign nationals plan to stay in the U.S. The duration of the visit can affect the policy's terms and coverage options. For example, someone who spends most of the year in the U.S. may be considered less risky than someone who frequently travels internationally.
• Tax residency: Tax residency status may also affect the underwriting process. Resident aliens, subject to U.S. tax laws on their worldwide income, may need to provide additional tax-related information, whereas non-resident aliens may have different tax considerations.

Minimum underwriting requirements

Depending on the carrier, foreign nationals may need to meet minimum solicitation, like age and income qualifications and nexus requirements. They need to establish meaningful ties to the U.S., such as being married to a U.S. citizen, owning a business in the U.S., or owning U.S. real estate. A foreign national must also apply for, provide documentation, complete health exams, and sign the policy in the United States. 

Look for specialized carriers

Not all carriers will offer life insurance products to non-U.S. citizens. When shopping for a policy, limit your search to carriers that can cater to foreign nationals, such as:

• Transamerica
• Prudential
• Symetra
• John Hancock
• Lincoln
• Allianz
• Mass Mutual

How is risk determined for foreign nationals?

Like U.S. citizens, carriers will look at a foreign national applicant’s risk profile. One common area considered is the applicant’s country classification. Countries are typically categorized as A, B, or C. Class A is usually considered the most “secure,” while B and C countries may be regarded as higher-risk or uninsurable due to economic or geopolitical concerns. 

Country classifications vary by carrier. For example, one carrier may determine that Brazil is a Class A country while another may say it’s a Class B. The country classification of the applicant can significantly impact the policy limits and premiums. 

According to information from Lincoln, examples of Class A countries as of 2023 include countries in Europe, Central and South America, and Asia, such as:

• Antigua
• Australia
• Belgium
• Chile 
• Costa Rica
• Germany
• Great Britain 
• Greece
• Hong Kong
• Singapore
• Taiwan 

Class B countries include many countries in the Caribbean and South America:

• Bahamas
• Colombia 
• Dominican Republic
• Ecuador 
• Jamaica 
• Mexico
• Peru

In many cases, Class C countries are considered difficult to insure due to economic or political instability, or because of U.S. trade sanctions. This includes:

• Bolivia
• El Salvador
• India
• Namibia
• Philippines
• South Africa 

Some countries have multiple classifications. For example, large metropolitan areas such as Beijing, Shanghai, and Zhuhai can be considered Class A locations in China. While towns in other regions of the country can be regarded as Class B, and rural areas can be labeled Class C. 

In addition to country classifications, carriers may ask additional questions about travel history. For example, a person from a Class A country who frequently travels to a Class C country may be considered higher risk than one who does not.

Carriers also consider other standard factors such as medical history, lifestyle habits like smoking, occupation, and financial history.

Ideal foreign national life insurance candidates

In general, a foreign national who meets the following criteria could be a good candidate for life insurance coverage:

Long-term residency: Carriers may prefer those who plan to stay in the U.S. for an extended period or have long-term residency intentions, which indicates the policy is less likely to lapse.

Financial stability: An ideal applicant has a stable financial background, a consistent income, and the ability to pay premiums for the desired coverage.

Good medical history: Clients in good health without significant pre-existing medical conditions are generally considered lower-risk and may qualify for more favorable rates.

Evidence of insurability (EOI): EOI is a way for the insurer to evaluate whether the applicant meets the necessary criteria to qualify for the requested coverage. For example, is it for spousal protection? In that case, a marriage certificate may be required. If the applicant is a business owner looking to take out a policy on the co-owner, then a business valuation will be necessary.