Life insurance is a crucial financial protection for any person with financial dependents, and certain policies can also act as a wealth-building family asset. US citizens and permanent residents – i.e., green card holders – have an advantage when it comes to getting US life insurance because there are multiple providers competing for their business. But if you're a non-permanent resident in the US, the process of getting a life insurance policy can be somewhat more challenging, and your options are limited. This guide can help you better understand your options by telling you about:
Getting coverage as a non-permanent resident
Coverage options for non-residents with US ties
The main types of coverage offered in the US
The process of applying for a policy
Coverage for those with non-permanent resident visas
Your ability to get coverage will depend mainly on the type of visa you have. Few companies will issue coverage for student visa holders. Still, the following types of visa holders can often get coverage if they're willing to shop different companies and overcome some added hurdles:
E – employer-sponsored immigrant visa
H1B – temporary work visa for someone in a specialty occupation
K – nonimmigrant visa for a fiancé/e of a U.S. citizen
L – temporary work visa for an intracompany transferee
O – temporary work visa for someone with extraordinary ability or achievement
TN and TD – visas for Canadian and Mexican NAFTA workers
It’s essential to ensure that your visa is up to date and valid when purchasing life insurance, and you can expect carriers to require additional documentation and assessments to accurately analyze your risk profile. You’ll increase your chances of getting coverage if you can demonstrate all of the following:
A US bank account This is often a prerequisite for getting a policy because it demonstrates that you can pay premiums without the need for complicated international transfers.
Sufficient assets or income Life insurance carriers want to see that you can pay your policy premiums.
A US address A residential address in the US is typically needed to obtain life insurance for both correspondence and legal requirements.
Social Security/Tax ID Insurers (and other financial services companies) often require a Social Security number or a Tax Identification Number (TIN) for administrative and tax reasons.
Your coverage options will vary depending on your visa type, duration, and the guidelines of the company issuing the policy; however, you will likely find it easier to get temporary term life insurance than permanent whole or universal coverage that builds cash value (see below). In any case, before applying for coverage, it’s a good idea to look at a term life insurance calculator to get an idea of your needs and consider working with an insurance agent or broker who is familiar with the unique challenges faced by non-permanent residents.
Non-resident foreign nationals with US ties
High-net-worth foreign nationals who aren't US residents but have significant business, financial, and family ties in the US may also qualify for life insurance coverage. These policies are typically quite specialized, and designed to help internationals with personal and business interests in different countries manage their complex affairs. Availability may be limited by your country of residence, and if coverage is offered, the underwriting process can be somewhat involved.
Despite such limitations, these policies can be an invaluable tool for internationals looking to the US as protection for family capital and assets. In addition to diversifying their financial portfolio, such policies can help solve the problem of transferring wealth to the next generation: While US residents enjoy a federal estate tax exemption of $12,920,000, the exemption for non-residents is limited to just $60,000.1 Non-resident life insurance can help bridge this disparity because death benefit payments are exempt from federal estate taxes.
Guardian is one of a handful of providers that offers this kind of coverage through our Global Citizens program. Permanent, cash value policies up to a maximum of $30 million may be available to those who meet the following criteria:2
A significant connection to the US For example, real estate or business ownership, equities, or other tangible and non-tangible assets, or direct family members who are US citizens
Maximum coverage will be based on assets held in the US.
The application must be completed and signed in the US
Other terms and conditions apply. Additional items, documents, and records will be required during the application process.
The Global Citizens Program
Guardian provides specialized life insurance solutions and services designed to meet the unique demands of high-net-worth international clients. Our Global Citizens Program allows qualifying clients to tap into a dedicated team that specializes in the more complex financial protection needs of clients with multinational interests – and provides white-glove service with the backing of one of the world's largest mutual life insurance companies. Clients must be non-resident, non-US citizens who demonstrate financial connections, holdings and/or family ties in the US. A dedicated case concierge team is assigned to help each applicant, and submissions are evaluated by specialized underwriters. Other amenities include a complimentary US trust review, translation services, law firm referrals, and more. To learn more, contact a Guardian financial professional.
The three main types of life insurance available in the US
Term life insurance
Some life insurance companies may only offer this type of coverage to non-permanent residents, which can provide significant life insurance protection at an affordable cost. A term life insurance policy covers you for a limited period, usually 10, 15, 20, or 30 years, but some policies may only be valid as long as you remain a US resident. If you pass away while the policy is in force, the death benefit is paid out income tax-free to your beneficiaries. Generally speaking, a beneficiary does not need to be a US citizen., but international beneficiaries may face tax implications.
After the term ends, coverage lapses, and you have to apply for a new policy. If you qualify, the insurance carrier will likely charge significantly higher premiums due to increased age and health risk. And, unlike permanent whole and universal life insurance (below), term policies don’t build cash value, so it isn’t suitable for building and transferring family wealth.
Whole life insurance
Whole life policies offer lifetime coverage with a guaranteed death benefit and fixed premiums. It also has a cash value component, which can help build and protect family assets and can be borrowed against or accessed in other ways while you are alive.3 Whole life policies from a mutual insurer (such as Guardian) may also qualify for dividends that can further build cash value, because these companies are actually owned by their whole life policyholders.4 The downside? While whole life policies provide lifelong coverage and asset-building benefits, the initial cost is significantly higher than term insurance.
Universal life insurance
Universal policies offer permanent coverage and build cash value with more flexibility (and fewer guarantees) than a whole life policy. You can adjust the premiums and death benefit level within a certain range, and these policies may give you a choice of ways to build cash value (for example, you may opt to earn a fixed interest rate or invest in the market). However, this flexibility also means that the policies have to be managed to a certain extent and care taken to ensure the policy account value doesn't dip below a certain level, which could cause coverage to lapse.5
Applying for US life insurance as a non-permanent resident
As with any important financial product, you should start by doing a little research to help decide how much life insurance you need and the best kind of policy for your situation. Consider focusing on providers or programs (such as Guardian’s Global Citizens program that specialize in providing policies to foreign nationals. Whatever kind of policy you end up getting, here are some things to keep in mind during the application process.
Gather relevant documents
As you start applying for coverage, it will help to have the following types of documents ready and available, depending on your specific situation:
Passport and visa documents
Proof of your residency or legal status in the US, such as a green card, valid visa, and if available, state-issued ID, such as a driver’s license
SSN or Individual Taxpayer Identification Number (ITIN) (or W-8 form if you are not a US taxpayer)
Proof of US ties (e.g., property deed, employment contract)
Proof of income or assets
Expect a medical exam
Most life insurance policies require some kind of medical underwriting to evaluate your health and insurance risk. In many cases, you'll need an actual medical exam; in others, you may just need to answer some health-related questions. You may also be asked to provide medical records. If documents from your home country are acceptable, the insurance company will likely require a certified translation.
Allow time for the underwriting process after submitting your application
The insurance company may require you to sign the actual policy application form – and complete other requirements, such as a medical exam – in the United States. Once you submit your application, the underwriting process begins. This includes an assessment of your health, age, and other risk factors. The insurance company typically has to deal with more unknowns – compared to an application from a US citizen – so the process tends to be slower. Also, premiums for non-permanent residents are often higher due to perceived additional risks.
Paying premiums as coverage starts
Assuming the underwriting process is successful, your policy will be issued. Ensure you understand all the terms and conditions of your policy as it is issued, especially those related to paying premiums. Many insurers (including Guardian) require that premiums be paid in US dollars from a US bank account. If overseas payments are accepted, make sure to account for transfer time and currency conversion fees to ensure complete and timely payment of your premiums.
Get help finding the right life insurance solution for your situation
If you’re a foreign national with temporary US residency, a Guardian Financial Professional can help you explore the range of coverage options available to you. Or, if you’re a non-resident with ties to the US, ask about the Global Citizens Program.
1 Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The information provided is based on our general understanding of the subject matter discussed and is for informational purposes only.
2 Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.
3 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.
4 Dividends are not guaranteed. They are declared annually by Guardian’s Board of Directors.
5 A Universal Life Insurance (UL) policy provides a flexible premium, choice of death benefit options, and a guaranteed crediting rate e.g. 2%). Policy growth is based on adequate funding, increasing crediting rates, and if costs of insurance is lower than expected. If any of the three factors just mentioned are lower than expected (policy funding and crediting rates), and/or higher than expected (cost of insurance), the policy may lapse.