Meeting The Life Insurance Needs Of Affluent Foreign Nationals
William H. Jackson
August 2017

With increasing globalization, more and more affluent foreign nationals have a presence in the United States. It is estimated that affluent foreign nationals control more than $70 trillion in assets and number over 14 million individuals.1 Furthermore, these affluent families are culturally receptive to the protection offered by life insurance. 

Why do many savvy foreign nationals look to the United States to buy life insurance? There are the usual reasons, including perhaps to protect a business interest. Two reasons stand out above the rest. Foreign nationals who own property in the United States have unusual exposure to Federal Estate Tax. Also, foreign nationals crave the affordability, security and currency stability of U.S. dollar-based life insurance policies offered by U.S. dollar carriers.

Resident and non-resident aliens are treated differently for estate transfer tax purposes. Resident aliens are taxed just like U.S. citizens and have the $5.4 million unified gift and estate tax exemption, as well as the annual $14,000 gift tax exemption. The hurdle they face is that all foreign assets are included. They also do not have access to the unlimited marital deduction. This means that a credit shelter trust might be necessary to reduce the impact of federal etate tax. Non-resident aliens don’t include foreign assets but U.S. assets are subject to the 40 percent federal estate tax rate and non-resident aliens only have a $60,000 exemption. Non-resident aliens have an annual gift tax exclusion of $14,000, and it cannot be split between spouses.2 Non-resident aliens do not have access to the marital deduction and the total value of joint tenant property will be included in the estate of the first spouse to die. In other words, the property will not be treated as owned 50 percent by each spouse. A foreign national with a million dollar California residence would be liable for $376,000 of federal estate tax on that property alone on the death of the first spouse. Life insurance is the go-to option to avoid liquidation and a secondary benefit is that life insurance is not considered U.S. sitused property subject to estate tax.3

Even foreign nationals who hail from Class A or B (safe) countries often face volatile currency fluctuations. So when they are looking to protect their families, they naturally gravitate towards carriers offering products backed by a stable currency. Therefore U.S. currency products and carriers are in demand. Because non-resident aliens can hold life insurance policies personally without the policy being subject to U.S. income or estate tax, the goals of wealth preservation and providing retirement income can easily be accommodated. No life insurance trust would be required.

Which foreign nationals can benefit from U.S. based policies? Most carriers require some U.S. connection. These connections could take the form of a minimum stay of 15 days per year, real estate ownership, a business interest or non-student immediate family living in the U.S. Some carriers may also require that a percentage of the assets, possibly 15 percent to 25 percent, used to justify coverage, be held in the U.S.

Most all carriers will require that solicitation and applications be taken in the U.S. Medical exams are usually required to be completed in the U.S., and if there are any foreign medical records, they must be translated into English. There is a good deal of variability in underwriting requirements of carriers that have an appetite for foreign national and foreign travel business. In any event, it is important to have a relationship with an IMO that understands foreign national business, can facilitate translation of medical records and that can provide relationships with the three different types of carriers that operate in this space.

1. Specialist foreign national carrier A4 that provides U.S. dollar coverage for clients that have no U.S. connections.

2. Carriers that require modest but significant U.S. connections. For example, carrier B5 requires that the visit must be for purposes other than to secure insurance and have one of the following connections:

  • A U.S. bank account.
  • Have ongoing business interest in the U.S.
  • U.S. investment account.
  • Be an employee of a U.S. based business.

3. Carriers that demand very substantial connections. Carrier C6 requires a global net worth of $5,000,000 and that                      the client reside in the U.S. for less than six months but at least 15 days a year. Also the following connections:

  • A U.S. bank account and 25 percent of the assets used to justify coverage must have been in the U.S. for at least six months.
  • One of the following must also be present. Real estate ownership, business ownership, U.S. tax liability, immediate family residing in the U.S.

There are a number of cities where the opportunity for foreign national life insurance business is substantial. According to the Lusk Center at the University of Southern California, the following metropolitan areas are the growth cities of the U.S. for new high-net-worth immigrants: Miami, Denver, Colorado Springs, Los Angeles, New York and Atlanta.

Accountants, attorneys, real estate agents and business associates of foreign nationals often have contacts with high-net-worth foreign nationals. With the proliferation of foreign national real property investment in the U.S. and the attendant estate tax problems, real estate connections can be particularly valuable. For example, the National Association of Realtors has a searchable list of Certified International Property Specialists who focus on high-net-worth foreign national business. Real property is also covered by property and casualty insurance. Mid-sized P&C firms would be a good resource for connecting to the high-net-worth foreign national client.

The foreign national market is growing and has definite risk protection needs. The right knowledge and relationships can help you serve this segment in an important and meaningful way.


  1. Source: World Wealth Report, 2015, Capgemini and RBC Wealth Management: Capgemini, RBC Wealth Management; and Scorpio Partnership Global HNW insights survey 2013.
  2. IRC § 2102(b) (1)
  3. IRC § 2105(a); Treas. Reg. § 20.2105-1(g)
  4. Pan American Life Insurance Group
  5. AIG Foreign National Underwriting Guide AGLC108891 REV0716 © 2016 AIG. All rights reserved.
  6. John Hancock Foreign National Underwriting Guide LIFE-5095web 9/16

For financial professional use only. Not for use with consumers. This material is intended to provide general information only. It is not intended to render legal, accounting, Social Security or tax advice, and the services of those professionals should be sought. Financial professionals who utilize this material may be able to identify potential retirement income gaps and introduce products, such as fixed annuities, as potential solutions. The testimonial may not be representative of the experience of other financial professionals and is no guarantee of future success.

Author's Bio
William H. Jackson
JD, CLU is the senior advanced markets consultant at Partners Advantage, working with all divisions of the company to assist financial professionals and agencies in growing their businesses. He provides his valuable strategies on a number of areas, including tax, financial, philanthropic, retirement, business and estate issues. He is part of an in-house team of highly experienced professionals at Partners Advantage which provides insights on complex cases and products. These services also include an in-house underwriting team and compliance and suitability team. Prior to joining Partners Advantage, Jackson served in a number of sales and product marketing roles at Sun Life and AIG Sun America. Jackson also has extensive experience managing pension, business and estate planning, and deferred compensation divisions. Jackson may be reached via email at:

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