Can You Get Life Insurance If You Are Not a US Citizen?

Life insurance offers financial protection, ensuring beneficiaries receive a sum of money upon the policyholder’s passing. This support can cover expenses like funeral costs, debts, living expenses, or educational needs for dependents, providing a financial safety net.

Eligibility Criteria for Non-Citizens

Non-U.S. citizens can generally obtain life insurance in the United States, provided they meet specific eligibility requirements. A primary consideration for insurers is the applicant’s residency status and their ties to the U.S. Green Card holders, classified as permanent residents, typically have access to the widest range of life insurance options. Some insurers might require a minimum residency period, such as two years, for Green Card holders to qualify.

For non-citizens residing in the U.S. on various visas, eligibility depends on the visa type and stability of their presence. Common qualifying visa categories include H1B (specialized workers), L1 (intracompany transferees), E1/E2 (treaty traders/investors), and certain student visas (F-1). The longer an individual has been present in the U.S. on a stable visa, the more options for coverage they have. Conversely, those on transient visas, such as B1/B2 tourist visas, or individuals with very short-term stays, face significant limitations or are ineligible, as insurers seek evidence of a stable U.S. address and intent to reside in the country.

All applicants, including non-citizens, must demonstrate “insurable interest,” meaning the beneficiary would suffer a financial loss if the insured person died. This ensures the policy serves its intended purpose of financial protection rather than speculative gain. A valid U.S. residential address and a U.S. bank account for premium payments are prerequisites. Insurers also require a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN) for identification and tax reporting purposes.

Application Process and Required Documentation

The application process for non-U.S. citizens involves gathering detailed information. Applicants must provide personal details, including name, date of birth, and contact information. Specifics about their visa or immigration status, such as type, issuance, and expiration dates, are necessary. Financial information, including income, assets, and liabilities, along with medical history, will also be requested.

Required documents include a valid passport, current U.S. visa, and the I-94 Arrival/Departure Record, which provides proof of legal entry and status. Proof of a U.S. address, such as utility bills or a lease agreement, is also essential. Applicants must provide their SSN or ITIN. Financial statements or employment verification may be requested.

Once information and documents are prepared, the application can be submitted. The process typically includes scheduling a medical examination, which must be completed within the U.S. Underwriting then begins, where the insurer reviews all provided information to assess risk and determine policy terms. This stage can take several weeks and may involve requests for additional information or medical records. Upon approval, the policy is issued, and the applicant makes the initial premium payment to activate coverage.

Tax Implications and Estate Planning

For non-U.S. citizens, understanding the tax implications for beneficiaries is important. Life insurance proceeds paid to beneficiaries due to the insured’s death are not subject to U.S. income tax. However, any interest accrued on the death benefit before payout is considered taxable income. Tax treatment in the beneficiary’s country of residence may vary, and they might be subject to local taxes on the proceeds, even if exempt in the U.S.

U.S. estate tax rules for non-U.S. citizens, particularly non-domiciled aliens, differ significantly from those for U.S. citizens or resident aliens. For non-domiciled aliens, U.S. estate tax applies only to U.S.-situated assets, and the exemption amount is considerably lower, often limited to $60,000. Life insurance policies issued by U.S. carriers on the life of a non-resident, non-U.S. citizen are considered intangible property and are not subject to U.S. estate tax. This makes U.S. life insurance a valuable tool for estate planning, as it can provide liquidity to cover potential U.S. estate taxes on other U.S.-situated assets without being taxed itself.

Basic estate planning considerations for non-citizens with U.S. life insurance include carefully naming beneficiaries. While a non-U.S. citizen can be a life insurance beneficiary, understanding any potential tax obligations in their home country is advisable. For those with substantial U.S. assets, establishing an Irrevocable Life Insurance Trust (ILIT) can help in estate planning by transferring policy ownership to the trust. This ensures the death benefit is excluded from the insured’s taxable estate and not subject to U.S. estate taxes, a relevant strategy given the low estate tax exemption for non-domiciled aliens.