#foreignnationals

Life Insurance offers many benefits to the owner and beneficiaries regardless of their citizen status. However, there are characteristics of a life insurance policy that may assist foreign nationals (non-U.S. residents) with their special estate and tax planning needs. The proceeds payable under a life insurance policy are not considered a tangible U.S.-based asset and are not subject to U.S. estate taxes for non-resident aliens.Benefits payable under a life insurance policy are generally income tax-free.In a permanent life insurance policy, any growth in the cash value is tax-deferred. This cash value may also be accessed income-tax-free by the policy owner. By using Life Insurance as part of the estate plan, a policy owner may be able to provide a tax-free benefit to their heirs in order to pay any U.S. estate taxes without having to sell a property. In addition, the policy may also provide some wealth transfer to the beneficiary after any tax liabilities are met.

Who is considered a Foreign National?

Permanent Residents. Green Card HoldersTemporary Green Card HoldersNon-Resident Aliens living in the United States Full-TimeNon-Resident Aliens, living outside the United StatesDual CitizensAsylum or Refugee StatusTemporary Protected Status (TPS)

Why should a Foreign National with U.S. connections consider owning a U.S. based Life Insurance policy?

It turns out there are many reasons a permanent life insurance policy may provide: income and estate tax-free death benefits,tax-deferred cash value growth,tax-advantaged distributionsliquidity heirs can use to protect assets,estate planning confidence. These short and long term benefits are meaningful for all policy owners but there may be special tax benefits to owning a life policy when you are a foreign national.

Estate and Tax Planning Considerations

Individuals who are not U.S. Citizens but have ties and assets in the U.S., as well as individuals who are U.S. citizens but whose spouse is not, have special estate and tax planning considerations. Did you know there are tax regulations that may cause your family to owe money to U.S. taxes? For example; A person who has never stepped foot in the U.S. may be leaving his heirs with U.S. estate taxes to pay if his portfolio included stock in a U.S. Corporation or other U.S. based assets.A surviving spouse living in a foreign country whose husband was a U.S. Citizen may be required to pay U.S. estate taxes on their second home located in Florida (as an example) that they owned at the time of his death.

The Tax Concerns

GIFT TAX The gift and estate tax marital deductions generally allow for transfer between spouses with no transfer tax consequences. However, there is no unlimited marital deduction for gifts to non-citizen spouses. Exclusions for lifetime transfers to a non-citizen spouse are limited to $148,000 annually with an additional lifetime exemption of $5,490,000 (2017 exclusion and exemption numbers). RESIDENCY STATUS Non-U.S. citizens who live in the U.S. may be considered a resident alien and subject to Income Taxes if they have a “substantial presence” in the U.S. Non-U.S. citizens who have connections or assets tied to the U.S. but do not have substantial presence may be considered nonresident aliens. This test is not always clear, and it may be important for individuals to understand whether or not they could be considered a Resident Alien for income tax purposes. ESTATE TAX Nonresident aliens are limited to a $60,000 estate tax exclusion on U.S.–based assets. As with gift taxes, there is no unlimited marital deduction for estates transferred to non-resident alien spouses unless transferred through a Qualified Domestic Trust (QDOT). U.S. based assets owned by a nonresident alien or that are being transferred to a nonresident alien may be subject to the estate tax. This includes all tangible property and real estate located in the U.S., or stocks, and an ownership interest in a U.S. corporation.

Additional Benefits of Owning a U.S. based Policy

Beyond the estate and tax planning benefits of the life insurance policy itself, a foreign national may also find benefit in participating in the U.S. Life Insurance Market. The U.S. Life Insurance market is the most mature in the world which may allow for access to improved product design and competitive product pricing.The U.S. Life Insurance industry is highly regulated through both federal and state oversight and is considered one of the most stable in the world.In addition, with the contract and benefits denominated in the U.S. Dollar, a policy may provide financial confidentiality, wealth diversification, and economic security that may not otherwise be available in a foreign market.A U.S. Life Insurance contract provides the personal freedom to choose beneficiaries and heirs and can avoid the concern of forced heirship for those whose home country requires a specific inheritance. Regardless of the policy owner’s citizen status, a life insurance policy may also help with many other needs such as income protection, business succession planning, legacy planning, wealth protection, and executive benefits planning.

Foreign National Underwriting Guidelines

Category 1 A person whose country of permanent residence appears on the approved countries list, and visits the U.S. for no more than 12 weeks out of the year. The 12 weeks do not have to be consecutive. Criteria To Be Met Enters the U.S. at least once per year and has an immediate family member, such as a spouse, children, siblings, or parent legally residing in the U.S. Owns property (real estate) in the U.S. Assets must be verifiable.Owns a business in the U.S. Business must be established for more than 12 months.Partner of a business in the U.S. that has been actively engaged in transactions for 12 months or longer.Directly employed by a U.S. company in an approved country, travel to the U.S. for business at least 2 times per year, with a minimum of 6 months of employment to be considered.Investment account in the U.S. (Account must be established for at least a year). Required Documentation Copy of Passport – always.IRS Form W-8.Cover Letter from the agent indicating a need for life insurance. Copy of U.S. Visa. Most recent I-94 form (Department of Homeland Security Records) and Travel History, available for download by the customer at DHS website.Foreign National QuestionnaireForm Articles of incorporation of a business and finances from owners and partners will be requested. Category 2 A person whose original country of permanent residence appears on the approved countries list but currently lives full time in the U.S. under one of the following visas: E1E2EB5H1BH1CH4K1K3L1L2O1O3PTNV1 All other visa types will be reviewed on an individual consideration basis. Criteria To Be Met Owns a business in the U.S. Business must be established for more than 12 months.Partner of a business in the U.S. that has been actively engaged in transactions for 12 months or longer.Primarily employed in the U.S. with one of our accepted visas.Investment account in the U.S. (Account must be established for at least a year). Required Documentation Copy of Passport – always. U.S. Social Security number (SSN) or Tax ID number (ITIN).IRS Form W-8 or W-9 Form.Copy of driver’s license for visa holders (residing in the USA) and U.S. citizens or permanent green card holders living abroad.Cover Letter from the agent indicating a need for life insurance. Copy of U.S. Visa.Foreign National Questionnaire Form Category 3 A U.S. citizen or permanent resident (green card holder) residing abroad for more than 12 weeks out of the year in an approved country. The 12 weeks do not have to be consecutive.  Required Documentation Copy of Passport – always. U.S. Social Security number (SSN) or Tax ID number (ITIN).IRS Form W-8 or W-9 Form.Copy of driver’s license for visa holders (residing in the USA) and U.S. citizens or permanent green card holders living abroad.Cover Letter from the producer indicating a need for life insurance. Most recent I-94 form (Department of Homeland Security Records) and Travel History, available for download by the customer at DHS website.Foreign National Questionnaire Form Required For All Prospects U.S. Bank accounts established for at least 6 months with activity in accordance with client finances.The client must have a U.S. address.Premiums must be paid in U.S. dollars via a U.S. bank account. The account owner must be the policy owner and/or the insured. The insurance company will not accept payments from a foreign entity or trust.Solicitation and all related aspects of the sale must take place within the United States.

Applicant Specifications

AGES 20 - 70 For ages 71+ contact our underwriting department. MINIMUM FACE AMOUNT $250,000 MAXIMUM FACE AMOUNT Unlimited (subject to individual reinsurance capacity) MINIMUM NET WORTH No minimum required, but subject to traditional underwriting requirements. TABLE RATINGS Up to table 4 OWNERSHIP (ALL ADDRESSED IN THE U.S.) Proposed InsuredU.S. - based employeeU.S. - based businessU.S. TrustAn immediate family member in the U.S. such as:spousechildrenparentssiblings MINIMUM ASSETS An Application Supplement Confidential Financial Statement form is required with a breakdown of client assets in the U.S. & Country of Residency, (if applicable). Assets and income must follow traditional underwriting guidelines. LIMITED POWER OF ATTORNEY (LPOA) Must be in the U.S. Limited Power of Attorney is available for foreign national applications. This form is optional and only authorizes the LPOA to handle the following: Accept the delivery of the policy.Accept ongoing policy communications. Who can be the Attorney in Fact? A relative of the policy owner who lives in the U.S.An attorney, Certified Public Accountant (CPA), banker, or other professional that is providing services to the policy owner and is not employed by the agent or agency.  Who cannot be the Attorney-in-Fact? Insurance Agent.Agency employee or any other individual involved with the sale or solicitation of the insurance policy.A relative of the producer.A friend who is not a professional providing business service.A person who does not reside in the U.S. MEDICAL EXAMS AND PERSONAL INTERVIEW Must be done in the United States. MEDICAL RECORDS TRANSLATED TO ENGLISH Most insurance companies accept medical records in Spanish. All other languages must be translated into English.

Approved Countries and Rates

AlbaniaAnguillaAntigua and BarbudaArmeniaArubaAustraliaAzerbaijanBahrainBarbadosBelizeBermudaBhutanBoliviaBosnia and HerzegovinaThe British Virgin IslandsA BruneiCanadaChileChina (Beijing, Shanghai, Shenzhen, Guangzhou)Cook IslandsCuracaoDominicaDominican RepublicEcuadorEl SalvadorFalkland IslandsFaroe IslandsFijiFrench PolynesiaGeorgiaGreenlandGrenadaGuatemalaGuyanaHondurasHong KongIndia Delhi & Mumbai onlyIndonesiaIsrael (except Gaza Strip and West Bank) minimum issue age 21JamaicaJordanKazakhstanKiribatiKorea, SouthKosovoKuwaitMacaoMacedoniaMalaysiaMaldivesMarshall IslandsMexico (Except within 60 miles of the border with the U.S., Guatemala & Belize,)MicronesiaMoldovaMongoliaMontenegroNauruNew CaledoniaNew ZealandNicaraguaNiueNorthern Mariana IslandsOmanPalauParaguayPeru PhilippinesQatarRussiaNorthern Mariana IslandsSamoaSan MarinoSaudi ArabiaSerbiaSeychellesSolomon IslandsSri LankaSt. Kitts and NevisSt. LuciaSt. Vincent and the GrenadinesSurinameTaiwanThailandTongaTrinidad and TobagoTurks and CaicosTuvaluVatican CityVietnam

TRANSLATOR

In the event that the applicant does not understand the English language, he/she must receive assistance from a translator (who must be over the age of 18) to obtain a comprehensive understanding of the content of the contract with the life insurance company. No agent or agency is allowed to act as translator. The translation must be certified by completing a form.

UNACCEPTABLE APPLICANTS

Any public person or Politically Exposed Person (PEP) such as but not limited to: politicianspublic figuresmissionariesjournalistsgovernment leadersmilitarypolicesecurity personneljudicial personnel

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