People have the freedom to choose to work and live practically anywhere in the world. With the power of the internet, we are able to become digital nomads and work from wherever our hearts take us.
This brings up a question that we are receiving quite often: Can I get a global term life insurance policy? In this article, we would not only answer this question, but we would also cover what is global term life insurance, the eligibility, and the important things to keep in mind.
Here is what we would cover
Prior to diving in, we want to acknowledge that every situation is different. While we are striving to provide detailed information about your opinions, we are unable to cover all scenarios. If you would like us to take a look at your personal situation, simply reach out to us. We specialize in life insurance for foreign nationals and will take the time to customize your options.
Why look into a US life insurance policy
We felt it is important to start here and cover the advantages of a US-issued life insurance policy. Here are just a few of the key reasons:
The policy is issued and paid in US dollars
While we are uncertain of how the world economy might go in 50 years, however as of today, the US dollar is considered one of the leading currencies in global trade. In other words, you have the peace of mind that your benefit would not lose value based on currency exchange.
Strong company performance
Most life insurance carriers in the US are highly rated with a long history in the insurance arena. Many companies have been in business for over 100 years. This is very reassuring, especially when trusting a company with your financial future in the next several decades
The insurance industry is highly regulated
This is additional protection helping our global clients feel at ease when selecting an insurance policy.
Relatively low cost
The cost of insurance for a US policy is fairly low and rates have been on the decline for a few years. In fact, according to Money Under 30 “life insurance rates are the lowest they’ve been in 20 years“.
Numerous tax advantages
Life insurance policies are often secured not only due to the protection they provide in case of a person passing, but also because of their tax advantages. We have dedicated a separate article on the topic of tax advantages of life insurance for foreign nations, but just some key points: the death benefit is income tax-free in the US, and the cash value within the policy could be accessed tax-free.
Will a US life insurance cover me anywhere in the world
This is something that is on our customer’s minds. Yes, a US life insurance policy would cover you if you pass away abroad. Please keep in mind that you need to be upfront and disclose any foreign travel on your application (past travel and future scheduled travels). This is crucial. The life insurance companies use the information to determine the risk and underwrite your application.
We have dedicated an extensive guide on things to consider, when a policy may not pay out, and what to look for. You can access the guide here.
It is time to turn our attention to who can qualify for a global term life insurance. We’ve separated the topic into several different groups.
US citizens living abroad or planning to move abroad
With numerous job opportunities, families are seeking to explore different cultures. It is not uncommon for clients to accept jobs in different countries. Do you as a US citizen still qualify for life insurance, even if you live abroad? The answer is: it depends.
The first thing we would be asking you is:
- What is your current country of residence?
Due to various political, health, and humanitarian concerns, not every country would be approved for foreign residency. The list of countries is regularly updated. To be sure if you are still eligible for coverage, simply reach out to us for the most up-to-date information.
- You need to be physically in the US to apply for coverage.
In order to qualify for US life insurance, you need to be physically present to sign your application and take a medical exam. We have written an extensive article on the topic outlining the exact process of applying for coverage when living abroad.
Non-permanent residents living in the US
This group is generally divided into 2 separate categories:
Living in the US with a visa:
Living in the US without a visa
We have covered numerous articles advising clients of the steps needed to secure a policy if your visa status is undetermined:
Non-US citizens living abroad
This would be the 3rd group that we would like to go over.
If you are not a US citizen and you do not live in the US, but you do have financial ties to the country, you fall into this category.
In order to secure coverage, you would need to follow additional steps to confirm eligibility:
Demonstrate why a policy from the US would make financial sense to you
In other words, how are you connected to the US financially
- Own a property
- Own a business
- Pay taxes
- Work for a US-based employer and etc.
Be physically present in the US to apply
The premiums need to be paid out of a US bank account (carries require for the account to be opened for more than 3 months).
Be a citizen of an approved country
This is important for 2 reasons:
- Some countries do not allow their citizens to buy life insurance outside of their country of origin
- You may be living in a country that is not considered approved for foreign residency (in other words, companies view it to pose a higher risk)
Process of applying
When looking into securing a global term life insurance, the process to apply is divided into 2 steps:
Demonstrate financial ties to the US
This would be the first part of the application. Before we start the process, we would like to ensure that we have a good chance of approval. If during our initial consultation, we are not able to establish financial ties, we would advise you. We believe it is better to be upfront and tell you that your application would be declined for lack of financial connection to the US
Be physically in the US
We have mentioned this already several times within the article, but we can not emphasize how important it is.
Please note: in order to get US-issued life insurance, you need to be present in the US.
Also, do not use a VPN, thinking that it would be sufficient. The last thing you would like is for the company to have grounds and reasons to void your policy and not pay out should you pass away.
Important things to consider
Not everyone is eligible for global term life insurance
Some companies only offer permanent plans to foreign nationals. Therefore it is crucial to work with an experienced agent who would ask the right questions and walk you through the process of securing life insurance
Taxes are always something we need to be mindful of. Please note that life insurance is generally income tax-free. This is one more reason why many people view life insurance not only as financial help to their families should they pass away, but as an estate planning tool
Now, the key detail is that you may not have to pay taxes on the benefit in the US, but you may be taxed from your country of origin or residence. Therefore it is important to work with an experienced tax financial advisor who is familiar with global tax
Every life insurance policy in the US includes something called a contestability period. Simply put, should you pass away within the first 2 policy years, the company has the right to contest the claim. They could re-open your application, re-order medical records and look for any discrepancies. Please do not give them a reason to void your policy. The key to avoiding future troubles is to disclose if you have any foreign travel plans in the next 12 or 24 months.
Global term life insurance has numerous advantages. Therefore, it is often times sought as a financial planning tool. The key to remember when looking into coverage from the US is that you would need to be able to show strong financial ties and also be physically present in the US.
We hope you find this information helpful. Please reach out to us if you would like us to review your personal situation.