Life Insurance for Foreign Nationals
For global citizens with business, financial, or personal ties to the United States, securing life insurance from a US-based company can provide essential financial protection.
This article explores the crucial role life insurance plays for foreign nationals, highlighting the unique advantages of US policies and key considerations when selecting the right coverage.
Understanding these elements is essential for making informed decisions to protect your global assets and secure your financial future.
Here’s what we'll cover in this post:Quick Article Guide
Why US Life Insurance?
At a basic level, the reasons high-net-worth foreign nationals want US life insurance are the same reasons US Citizens purchase life insurance. They want to preserve wealth for future generations. They need to provide income for their families and college funds for dependents. Succession planning for those with US business interests and liquidity for US estate taxes can also be reasons individuals may need coverage.
Another reason is pre-immigration planning and the ability to position a policy as a US-based asset, offering security and stability. It can provide liquidity to cover various debts and taxes and preserve wealth for future generations.
What is different about US Life Insurance?
The types of products available in the US differ from those available in other countries. US companies offer various products: Term Insurance, Whole life insurance, Universal Life Insurance, Indexed Universal Life Insurance, Variable Life insurance, and Survivorship Life Insurance. Other countries may offer only Term Insurance.
The total line of death benefit tends to be much higher than in other countries. US life insurance companies can offer $100 Million to those who qualify, whereas the same person may only be eligible for $5 or $10 million in their home country.
US Life Insurance is denominated in US dollars, the world's currency. The currency of other countries may not be as stable.
The US Life Insurance market is the largest and most competitive in the world. Competition leads to better pricing and more innovative products, which could result in significant savings over the coverage offered in the home country.
Foreign Nationals
When discussing foreign nationals, we divide them into resident and nonresident aliens. For income tax purposes, resident aliens generally mean someone with a green card, though there is a “Substantial Presence Test” as well. However, it is a different story when discussing estate and gift tax purposes. Residency will drive estate and gift tax planning concerns and what they can and can't do.
Resident aliens live in the US but are not US citizens. On the other hand, nonresident aliens are also not US citizens but are not considered residents. So, how do we determine the difference? What makes someone a resident versus a nonresident for estate and gift tax purposes? We can put together a list of broad guidelines that might help distinguish between the two.
Is someone's primary residence in the US? Do they live here for most of the year or maybe all year? Do they have immediate family in the US? Are their personal and business assets in the US? Do they pay taxes in the US? If all those questions are answered “yes,” then a clear case can be made that they are US residents.
Someone who comes to the US once a year for business and has no US assets is clearly a nonresident. But what about someone who comes to the US once a year for four months and their family’s here? They spend the rest of the year traveling outside the country while their family remains in the US. That may be a gray area. Working with an experienced attorney or CPA in these situations is especially important.
Nonresident Aliens
Nonresident aliens are neither US citizens nor domiciled in the US. They may own homes, businesses, or other investments in the US. These physical and economic ties can create meaningful financial challenges like potential US federal estate taxation.
High-net-worth and affluent nonresident aliens typically know the risks of their home country’s economy and the corresponding risks of currency fluctuations. They may also know their local life insurance carriers' capacity, product, or claim limits. They may not know their potential US estate tax liability or that they may qualify for US life insurance to help with the liabilities.
Tax Concerns
Taxes on US situs property are imposed far more harshly on nonresident aliens than on US citizens and resident aliens. Here is a comparison:
| Resident | Non-Resident | |
| Estate Tax Exemption | $15M | $60K |
| Gift Tax Exemption | $15M Plus Annual Exclusion Gifts | Annual Exclusion Gifts. Only $19K |
| Property Subject to Tax | US and Worldwide Property | Only on US situs Property |
| ILIT Needed for Life Insurance to be Excluded from Estate Taxes | Yes | No |
US Situs Property includes real estate located in the US, tangible personal property in the US such as jewelry, antiques, artwork, etc., shares of stock of a US corporation, US bank deposits for trade or business, and retained beneficial interest in a trust, including foreign trusts.
It excludes US personal bank deposits, stock in companies incorporated outside the US, some US treasury debt, and death benefits from a US life insurance policy on the decedent’s life. While a foreign national who is a “nonresident alien” can own a policy on their own life without it being subject to US estate or income taxes, there may be other reasons to own it in a trust, such as asset protection from lawsuits.
For example, a Mexican foreign national has a net worth of $10M worldwide, $5 million in US businesses and real estate, and a US bank account of $500,000. The estate tax exposure would be:
US Net Worth: $5,000,000
Tentative Federal Estate Tax (40%): $2,000,000
Less Credit: $19,000
Net Estate Taxes: $1,981,000
Net US Assets: $3,019,000
Resident Aliens
Many know the estate tax rules for the traditional situation where both spouses are US citizens. Each spouse has a $15 million estate tax exclusion (2026). There is an unlimited estate and gift tax marital deduction. Property can be owned jointly. There is an annual $19,000 gift tax exclusion (2026), and spouses can split gifts.
When one of the spouses is a resident alien, estate planning changes. Many things remain the same if one spouse is a US citizen and one spouse is a resident alien. They still have a $15 million estate tax exclusion. They can own property jointly, have an annual gift tax exclusion, and do gift splitting. However, the US citizen no longer has an unlimited marital deduction. It is only $194,000.
The US citizen could not necessarily leave all their assets to the nonresident spouse without taxation. They could still use their $15 million estate tax exclusion, so maybe that isn’t a problem. Larger estates may have an estate tax problem at the first spouse’s death as opposed to the death of both spouses. The estate tax exclusion could also be reduced in the future, so many more couples will be affected.
One technique to delay the estate tax due at the death of the US citizen spouse is using a Qualified Domestic Trust (QDOT). A QDOT is a marital deduction trust used when an individual wants to leave assets to their surviving spouse and qualify for the unlimited marital deduction when the spouse is not a U.S. citizen.
A QDOT requires that all income be paid to the spouse for life. One trustee must be a US citizen or domestic corporation. The US trustee must be able to withhold QDOT tax on any distributions of the trust principal. The executor of the estate must make the QDOT election on a timely filed federal estate tax return. A QDOT must also satisfy other marital deduction rules.
US Estate and Gift Tax Differences
For married couples, there are nine possible combinations of US citizen, resident alien, and nonresident alien. The chart below summarizes each combination's differences in US Estate and Gift Tax.
Summary of U.S. Estate and Gift Tax Differences
| Decendent/Surviving Spouse | Decendent's Estate Tax Applicable Exclusion Amount3 | Estate Tax Marital Deduction | Decendent's Interest in Property Held Jointly with Spouse4 | Annual Marital Gift Tax Exclusion5 | Availability of Gift Splitting to a Third Party | Availabilty of Gift Tax Annual Exclusion |
| U.S. Citizen/U.S. Citizen | $15,000,0003 | Unlimited | 50% | Unlimited | Available | Available |
| U.S. Citizen/Resident Alien | $15,000,0003 | Only with a QDot | 100% | $194,000 | Available | Available |
| U.S. Citizen/Nonresident Alien | $15,000,0003 | Only with a QDot | 100% | $194,000 | Not Available | Available |
| Resident Alien/U.S. Citizen | $15,000,0003 | Unlimited | 50% | Unlimited | Available | Available |
| Resident Alien/Resident Alien | $15,000,0003 | Only with a QDot | 100% | $194,000 | Available | Available |
| Resident Alien/Nonresident Alien | $15,000,0003 | Only with a QDot | 100% | $194,000 | Not Available | Available |
| Nonresident Alien/U.S. Citizen | $60,000 | Unlimited | 50% | Unlimited | Not Available | Available |
| Nonresident Alient/Resident Alien | $60,000 | Only with a QDot | 100% | $194,000 | Not Available | Available |
| Nonresident Alien/Nonresident Alien | $60,000 | Only with a QDot | 100% | $190,400 | Not Available | Available |
Data provided by Prudential.com
*3 Applicable for 2026 as indexed for inflation. Current exclusion amounts are accurate as of 01/01/2026. Estate, Gift, and GST tax exemptions and federal credit are estimated amounts until the IRS computes using chained CPI.
*4 Unless the considerations can be substantiated for the noncitizen surviving spouse's portion.
*5 Rates for 2026; amounts are adjusted for inflation.
Why Now?
Corporate Transparency Act
Foreign nationals have significantly underreported estate taxes. Foreign holdings of US securities are $27.2 trillion in 2021. From April 2020 to February 2021, there were $54.4 billion foreign US residential real estate purchases. Yet according to the IRS, only 23 estate tax returns paid $274 million in taxes in 2021. Due to the new Corporate Transparency Act (CTA), the IRS may wake up to this underreporting.
The Corporate Transparency Act imposes new reporting requirements for both foreign and domestic corporations and entities such as LLCs to report who has beneficial ownership. Criminal and civil penalties of up to $500 daily and even jail time can apply to those failing to report.
Take the example of a citizen of Mexico who has a worldwide net worth of $10M and owns property worth $2M in a US LLC. When he dies, the property passes in equal shares to his children. Because the estate tax exclusion is only $60,000, nearly $800,000 in estate taxes would be due on the $2M property.
Pre-CTA, the children were not obligated to update the LLC records, and the federal government could not know if a transfer occurred. Post-CTA, the children will have 30 days to notify FinCEN of a change in beneficial ownership. Even if the children do not report, FinCEN manages databases and cross-references registered entities, and at some point, the transfer will be apparent.
Who Qualifies For US Life Insurance?
Resident aliens typically will not have a problem getting US life insurance. However, most US life insurance companies will not cover nonresident aliens. A few companies can offer insurance, but there are requirements.
Solicitation
All companies require solicitations to take place in the US. The entire new business process must occur in the US, e.g., illustration, application, and completion of underwriting requirements, including examinations and policy delivery. There should be enough time spent in the US to complete the information gathering, underwriting, and policy delivery process. Up to five years of medical records can be required. The life insurance must be paid for from a US bank account.
Nexus
All companies require that the insured have a US connection—a physical and financial presence in the US. This could include owning US real estate or business, having immediate family members in the US, having a US tax liability, or having an existing US financial presence, including a US bank account.
Other Requirements
Other requirements may vary depending on the carrier. Some require a minimum global net worth. Some companies offer both term and permanent coverage, but a few require a permanent policy. The country of origin can also determine the amount and risk class of the coverage.
How JRC Insurance Group Can Help
JRC is an independent life insurance agency that represents 63 highly rated providers. Access to dozens of insurers and their underwriting guidelines allows our agents to anonymously shop the market on your behalf to match you with the best policy for your budget and needs.To learn more about your options for life insurance, or for an accurate quote based on your age, health, and coverage needs, call us today at 855-247-9555. You can also select your state of resident below to instantly compare term or permanent life insurance rates from dozens of providers.
Written by:
Louis Lopes, CLU ChFC
Chartered Life Underwriter, Licensed Life and Health Agent
Louis has been in the insurance business for over 30 years. He specializes in “high risk” cases as well as more complex coverages for long term care, disability, and estate planning.
Expert reviewed by:
Clifford Pendell
Managing Partner and Co-founder
Cliff is a licensed life insurance agent and one of the owners of JRC Insurance Group. He has helped thousands of families of businesses with their life insurance needs since 2012 and specializes with applicants who are less than perfect health. In his spare time he enjoys spending time with family, traveling, and the great outdoors.
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