There are many students, choosing to continue or start their education in the US. Many of them have tried to secure life insurance protection, just to be turned down. Right of the start, we would like to tell you that: Yes, life insurance for international students is possible. In this guide, we would outline why foreign students may want to secure a policy, things to consider, the process and everything you would need to know.
What we would cover
Prior to diving into the topic, we would like to point out that we are here to help and answer any questions you might have. Our agents have the experience and knowledge to find you the best-priced policy.
Why an international student need life insurance
Life insurance is an extremely powerful financial tool. If used properly, it could help minimize the financial burden of one’s passing. There are several reasons why you need to consider securing a policy. We’ve listed some of the most common ones.
If you even have the intention to reside in the US permanently, you need to consider setting up a life insurance policy. According to the US tax code, your family may be subject to an estate tax, should you leave assets in the US.
It is no secret that education is expensive. Many people are relying on student loans to pay for college-related expenses. Just look at the stats below:
Among the Class of 2018, 69% of college students took out student loans, and they graduated with an average debt of $29,800, including both private and federal debt. Meanwhile, 14% of their parents took out an average of $35,600 in federal Parent PLUS loans.
You’ve probably heard another scary statistic: Americans owe over $1.56 trillion in student loan debt, spread out among about 45 million borrowers. That’s about $521 billion more than the total U.S. credit card debt.
We understand that no one wants to think about let alone plan his or her funeral. However, it is a topic that you need to consider. Dying in the US is not cheap. Below is the average cost for the different funeral costs:
Funeral here – the average cost of a funeral is on the rise. It is hard to predict exactly how much it would cost, as there are many variables. However, a funeral could cost your family anywhere from $7-$15,000 dollars
Cremation cost – due to cost, cremation services are getting more popular and more people are choosing to be cremated vs traditional burial. Nevertheless, cremation services are not cheap. Based on your state, type of service and other miscellaneous, the cost can be anywhere from $2-$7,000 dollars.
Ship your body to your home country – many students do not have any immediate family in the US. Therefore, the only logical scenario would be to have their remains shipped to their home country. As you can imagine, this is very costly. It involves special refrigeration, casket, flight cost and etc. From what we’ve seen the cost is starting from $10,000 and goes up.
It is not uncommon to see a Go fund me account created from the family to pay for transportation cost. Please don’t make your family chose that route.
Having life insurance would help with the final expense and will give peace of mind to your family that they can say their goodbyes. They might be able to flight to the US and arrange the death certificate, transportation and etc or higher someone to that for them.
You are planning to build a life in the US
If your intentions are to reside in the US permanently and build a life here, you definitely need to consider securing life insurance as soon as possible. You need to have insurance, not only because of the tax reasons we mentioned above but to ensure that your dreams are protected.
On a side note,
Did you know that the majority of people overestimate the cost of life insurance? Try to guess how much a sample policy would cost… we will give you sample prices later into the article.
How to select your beneficiary the right way?
Who should be a beneficiary to your life insurance policy is a very important question. Typically, we select the family as they are the closest people to us. This includes parents, siblings, spouse or children. However, what would happen if the beneficiary is also a foreign national or if you are not related? Here are some of the things that life insurance will look and things you should consider:
Beneficiary living in the US
If the person who will be handling your financial affairs lives in the US, it would make the death process faster. All of the paperwork could be handled easily and the beneficiary will receive the life insurance proceeds in a timely manner.
Here is the catch,
It is very common, for international students not to have immediate family in the US. Therefore, you might consider naming a cousin or a friend as a beneficiary. This could make sense to you, since that person may be the closest to you in the US. However, the companies require an insurable interest. The beneficiary needs to suffer some sort of a financial loss of your passing. In most instances, friends would not suffice.
Beneficiary living abroad
If your beneficiary lives abroad, it could add additional steps to the process. Please review our comprehensive guide for naming a foreign national as a beneficiary to life insurance.
Here are the things companies will consider when reviewing your application
Current visa status
Companies would want to see a copy of your visa. Some of the eligibility student visas are J-1 and F-1. The visa needs have an expiration date for more than 60 days from the date of the application. If the visa is expiring within 60 days, companies will ask about renewal paperwork. Please review our guaranteed issue life policy, if your visa is expired.
Country of origin
There are many regulations when it comes to securing a policy for foreign nationals. There are countries that do not allow their citizens to secure life insurance policies abroad. In some other instances, due to safety concerns, carriers will not offer insurance to citizens of other countries. We’ve outlined some of the most current regulations in our post about foreign nationals. Some countries are so unique, that we felt the need to create a separate guide on life insurance for Chinese citizens.
As an international student, you might be limited to the numbers of hours you can work. This could mean that your income is relatively low. Carriers ask about your income to determine financial justification. Based on your age, they could approve 30 or 35 times your annual income.
If you are 22 years and your annual income is $10,000, the maximum coverage available to you would be approximately $300,000. This figure represents 30 times your annual income.
This is another factor that carriers will look at very closely. They would ask about any health conditions that you are currently treated or have been treated for in the past. It is not uncommon for them to ask about your medical records.
If your most complete medical records are abroad, they would need you to request them and have them translated in English.
Please advise us ahead of time if this pertains to you and we would advise you what your next step should be.
Almost always the question about foreign travel is present in a life insurance application. They will ask about past travel patterns and future travel plans.
Please be honest and upfront with us and with the carrier if you have any international trips planned. You want to make sure that they have all of the required information when underwriting your application. Lying on your life insurance application may give a company a reason to contest a death claim.
What are the steps to secure a life insurance policy as an international student
Shop – this is where we come in. We are an insurance broker contracted with over 20 top-rated insurance carriers. We take the time to review your information and determine which carrier will offer you the best rate and the easiest approval process. Please keep in mind that there are no additional fees to work with an insurance broker. The rates we would provide you are the same as if you were going to call the company directly.
Apply – During this step, we will help you submit the application with the most appropriate company. We will facilitate the process and advise you of the next steps and if an exam is needed.
Exam – there are different types of policies. Some will require a medical exam, some will not. Please advise us if you have any preferences.
Underwriting – during this step, the carrier reviews your application. They could order your medical records and will be reviewing the results from your exam if you had one completed.
Approval and delivery – we will advise you of the carrier decision right away and let you know what is the next step to place in force. After all of the requirements have been met, the company will mail you the policy. Some companies offer the option to send you the policy electronically.
Available types of life insurance for international students
There are several factors that companies will consider when they are underwriting an application and reviewing what options are available. We will touch on eligibility a little later into the article. For now, let’s look at types of insurance available:
Term insurance – this type of policy provides relatively high coverage limits for a relatively low monthly rate. The biggest drawback of this option is that has an expiration date. In other words, once the term ends, the policy will sunset.
Permanent insurance – this type of policy, on the other hand, provides life long coverage. You could rest assured that you would not outlive your life insurance. The downfall is the price.
Some companies could offer only permanent policies for foreign nationals. There are other carriers who could offer both term or permanent insurance. When you would with a broker, we would be able to guide you through the process and advise you of your options.
Another thing to consider,
Prior to selecting coverage, take into an account your needs. If you are planning on returning to your home country after completing your education, term insurance might be a better fit for you.
Always, consider your needs when it comes to coverage amount and type of policy to get. Every situation is different and you don’t want to have a cookie cutter, standard policy, but a policy tailored to your needs.
Did you know that almost half of the people overestimate the cost of life insurance? Below we’ve gathered some sample prices for a 20-year term.
Life Insurance rates 35 year old male Non Tobacco $250,000 - 20 year term
|Insurance Rating||Price per month with exam||Per per month with NO exam|
Yes, there are many options to find life insurance for international students. Companies will ask about your visa and other requirements to review your application. It is imperative to work with an experienced broker, who is familiar with the carrier’s foreign national guidelines. When working with non-US citizens, there is a different set of criteria. We are experienced and would love the opportunity to earn your trust and help you secure the policy you need.