Love knows no boundaries. In today’s globalization, it is very common for a US citizen to marry a foreign national. We’ve helped many families secure the coverage they need regardless of their country of origin. Therefore, we decided to create a guide outlining how to get life insurance for a foreign spouse.
Life insurance is a very strong financial tool and we wanted to list the benefits, steps and things to consider when looking into setting up a policy.
Based on your needs, we decided to divide the guide into 2 major points. You can click on each topic for more information:
- You are a US citizen naming a foreign spouse as beneficiary
- Looking to secure life insurance for a foreign spouse
You are a US citizen naming a foreign spouse as beneficiary
If you a US citizen, living in the US, you would have a lot of options to choose from when selecting life insurance carrier. Every insurance company will approve coverage, considering you could qualify based on health and lifestyle. As we mentioned it is very common to have a foreign spouse listed as a beneficiary.
Before we dive into the topic, we would like to stress that we are not tax consultants, nor estate planning professionals. You would always need to consult with your attorney to have the most up-to-date and accurate advice for your personal situation.
Here are some of the advantages and things to consider:
The biggest advantage of life insurance is providing a tax-free benefit (in most cases) to the beneficiary. This is very important when the beneficiary is a foreign national spouse.
Simply because of the way how will estate taxes be handled upon the death of the US citizen spouse. Typically, the US tax code would allow exemptions to federal estate tax if assets are left to a U.S. citizen surviving spouse. However, the marital deduction does NOT apply when the surviving spouse is not a US citizen. The deduction also will not apply even if he or she is a permanent resident. The reason behind it is that the federal government wants to prevent a non-citizen from inheriting a large amount of money and return to the country of origin, without paying any estate taxes.
Another thing to consider:
It may be beneficial to look into setting up a Qualifying Domestic Trust (QDOT). It is a unique type of trust that allows taxpayers who survive a deceased spouse to utilize the marital deduction on estate taxes. This would apply even if the surviving spouse is not a U.S. citizen.
Consult with an estate planning attorney and/or CPA. The tax code changes regularly and you would need to have the most up-to-date information.
Looking to secure life insurance for a foreign spouse
In this topic we would turn our attention to how can you find a life insurance on your spouse if he or she is a foreign national.
Important to know:
Even though you and your spouse are legally married and both reside in the US, many companies may postpone coverage. This is especially true if your spouse is not yet a permanent resident.
This is why it is very important to work with a broker, who is familiar with carriers’ guidelines and can point you in the right direction. We specialize in life insurance for foreign nationals.
What information will companies ask:
This will be one of the first thing that carriers will ask. They want to ensure that you will be living in the US or someplace that is considered safe. If you reside in the US 3 months or less, your spouse would be considered non-resident for the purpose of life insurance.
In some instances, there may be U.S. government restrictions regarding life insurance sales with residents of some countries. The countries with which we cannot conduct life insurance business include but are not limited to Burma, Cuba, Iran, North Korea, and Sudan.
Country of citizenship – many countries do not allow their citizens to secure life insurance policies outside of the country of origin. Some countries have legal restrictions for the sale of insurance to their residents. Restrictions include product limitations and ownership limitations. These countries include but are not limited to Argentina, Canada, Japan, France and Switzerland (the list could change).
Please note: That even though there may not be any government restrictions, we won’t be able to assist the residents of Afghanistan, Colombia, Cambodia, Haiti, Iraq, Lebanon, and Russia to find life insurance. This is due to risk that many carriers considered too difficult to price, such as crime, health and safety standards, political or economic instability, etc.
The list of countries outlined above is always changing. Please reach out to us for the most up-to-date accurate information.
Other factors playing a role in the life insurance application of a foreign spouse:
Employment – is he or she currently employed. This will determine the amount of coverage available. If you spouse is currently not working, many companies would limit the amount of insurance available up to 50% of your coverage.
Example: Tim’s coverage is $500,000. Emily is not working. Many carriers would approve a
lifeinsurance policy on Emily for up to $250,000.
Medical history – as a part of the underwriting process, carriers would need a copy of the applicant’s medical history. This includes medical records, prescription reports, past surgeries and etc. If your spouse’s medical records are from another country, you would need to request them and provide them with a translation in English.
Please reach out to us, prior to requesting your spouse’s medical records. There are procedures that we need to follow. Also, carriers have a list of approved vendors for the translation of the records, if not in English.
There are many things that you need to consider when trying to secure life insurance for a foreign spouse. Please reach out to us with your personal situation and we will outline your options.