The first thing that comes to mind when we think about life insurance is who we want to protect from the financial burden of our death. In most of the cases, we select our closest relatives as a beneficiary. However, what happens if we want to name a foreign national as a beneficiary on life insurance? In this post, we will go over some of the basic terms of selecting a beneficiary and what should you do once you select one.
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Selecting a beneficiary should not be a difficult decision. The main thing that you need to keep in mind that is that a person needs to have an insurable interest. This is something the insurance companies are looking for when reviewing one’s application for life insurance.
What is an insurable interest?
Most simply put, the beneficiary must suffer some form of financial loss of your death. Some of the most common examples of people named as beneficiaries are spouse, kids, parents, girlfriend, boyfriend and etc. The same rule applies when selecting a foreign national as a beneficiary to your U.S. life insurance.
For example, Tom is supporting his family in Mexico by sending them money. If he passes away, the transfers will stop and his family will suffer financial hardship. This constitutes insurable interest. In many cases, a simple note to the underwriting department explaining why naming this particular person as a beneficiary is helpful.
Filing a death claim is designed to be a very simple process. The life insurance companies understand that this is a very difficult time for everyone involved. Therefore, they are trying to make the process as easy as possible. The main things that the beneficiary needs are a death certificate, proof of identification and the policy information. Please note that if the cause of death is not yet determent, the life insurance companies will wait until any following investigation is complete.
There are things you can do to minimize complications when naming a foreign national as a beneficiary to your life insurance.
The first thing is to have their complete information listed on the policy. For example, if you only include my sisters, it will be confusing for the insurance company it will make the process of filing a death claim longer. In order to avoid any delays, please include the following information in the beneficiary section of your life insurance application:
- Full legal first and last name
- Their Date of Birth
- Social Security Number, if they have one
- Phone number
- Benefit percentage – this is used if you want to have more than one beneficiary. For example, you have 2 brothers, and you want each one of them to receive 50% of the death benefit.
Please don’t worry if you don’t have your beneficiary’s complete information. Do not let this stop you from securing a life insurance policy. You can always call or e-mail us and we will send you a one-page form to update their info.
Also, if you decide to name a foreign national as a beneficiary on your life insurance policy, please let them know.
It seems simple enough, but we’ve encountered cases where the beneficiary doesn’t know which company to contact. Submitting a death claim without the policy information can be challenging, but if you are a foreign national could be even more difficult. Not to mention that there may be a language barrier. Please provide your beneficiary or a trusted person, if they don’t speak English, with the following information:
- Life insurance company name and phone number
- Policy Number
- The phone number of the agent on record
- Death benefit amount
- The names of any other beneficiaries you may have. All of the beneficiaries need to be part of the death claim in order for the company to pay the benefits.
Another thing to consider when naming a foreign national as a beneficiary is the tax code of the country he or she lives.
Typically, life insurance proceeds are tax-free in the U.S. However, this may not be the case for the country where your beneficiary lives. Please consult an international tax attorney to determine if there are going to be any tax consequences for them. The last thing you want is for your beneficiary to have to worry about any tax problems.
The last advice we will give you is to review the information on your life insurance on a regular basis. A good life insurance agent will call you for a policy review every couple of years, if not every year. You may have a case where the beneficiary changes their name. In this case, you need to update that section of your policy to avoid any complications later. Simply put, things change. We need to make sure that the information on your policy is up to date and the coverage amount is still adequate. If you are not sure how much coverage you should have, visit Most common life insurance questions answered for a sample life insurance needs calculator.
Please keep in mind that we are here to any additional questions you may have. You can reach us via e-mail or by phone. We are looking forward to working with you in getting the peace of mind that your family is protected!