International life insurance for expatriates and global citizens

As globalization and technology spread to every corner of the world, a new class of international workers and businesspeople has arisen. Some are executives of multinational corporations; some may be family members with interconnected businesses spanning different countries; others are still digital nomads, with the freedom to pursue lucrative careers from anywhere on the globe with an internet connection. This international mobility can enable a lifestyle that is both rewarding and fulfilling.

But if you're one of these expatriates and global citizens, you also know there can be challenges and limitations. For example, consider life insurance, one of the most basic forms of financial protection. While US citizens and permanent residents have access to a wide array of policy types from scores of providers, options for expats and foreign nationals are far more limited. In many cases, a life insurance policy purchased in the United States may not even pay out if the policyholder moves abroad. Fortunately, international life insurance policies are available.

Two ways an international life insurance policy can help protect family finances and assets

Generally speaking, international life insurance policies work the same as other life insurance. The policyholder pays regular premiums to the life insurance company, and the insurance company pays a death benefit to the named beneficiaries if the policyholder passes away. Depending on the type of policy and what it's used for, you may be able to pay premiums and receive payouts in a foreign currency, such as Euros or Pounds Sterling. And importantly, these policies pay that benefit even if the policyholder is living or working abroad when they pass away. However, there still may be limitations and exclusions – such as for a death that occurs in a war zone – so you need to pay careful attention to the terms of the policy.

Before getting an international policy, you should also be clear about what kind of financial protection you want for your family because that will determine which type of life insurance to get. In general, an international policy can be used for two kinds of purposes:

1. Income replacement in the event of death
   A policy can help protect a family's financial future by paying a death benefit large enough to replace several years – or even decades – worth of income and support that you would have otherwise been able to provide.

2. Wealth and asset preservation
   Certain kinds of international policies are designed to help non-resident foreign nationals with US assets optimize estate planning and help preserve family assets and wealth as they are passed on to the next generation.¹

Getting life insurance for income replacement while living abroad

If you’re looking for income replacement while working and living abroad, a  term life insurance policy is typically the most cost-effective way to get coverage. These policies protect you for a limited period of time, or term, typically ranging from 1 to 30 years. This can be advantageous if you want to provide a substantial death benefit while children are still at home, but note that these policies become more expensive when you want to renew and they don't build cash value. However, if you are in the process of moving or already living abroad, global term life insurance may also be easier to get than a permanent life insurance policy. A few things to consider:

• If you already have life insurance before moving: Check your policy to see what, if any, travel restrictions there are. If coverage isn't an issue in the country you are moving to, that's great. But you still have to make sure to arrange for timely premium payment in US currency – you don't want your coverage canceled because an international money transfer is lost, or fluctuating exchange rates don't cover the full dollar amount of the payment.

• If you don’t already have life insurance, try to get coverage before moving abroad: You will have fewer coverage options because many insurers won't take on the risk of insuring someone who plans to live overseas. The companies that write such policies take that higher perceived risk into account by charging somewhat higher rates – but if you are relatively young and healthy, you will likely be able to find affordable options if you are willing to shop around. Also, the application process will likely be easier if it is completed before moving, because many companies will insist that the life insurance medical exam and policy signing take place in the United States.

• Getting coverage after moving abroad: People in this situation have the fewest choices. However, many specialty insurers in the US and other countries still offer global life insurance options. The application process may be somewhat more complex (for example, medical history and other records may require certified translation), but if you are in reasonably good health and willing to shop around, you are likely to find coverage.

Getting life insurance to help foreign nationals preserve US-based wealth

Permanent life insurance, particularly whole life insurance, is more suitable for wealth building and asset preservation. These policies build cash value at a steady rate over time, making them a stable, predictable asset in times of financial turbulence.² And because they are designed to last a lifetime, they can be used for estate planning as a vehicle to transfer wealth to children and family members. Doing so can help overcome some significant taxation challenges faced by non-resident foreign nationals with US-based assets:

• The estate tax disparity
  While US residents enjoy a federal estate tax exemption of $12,920,000, the exemption for non-residents is limited to just $60,000. Non-resident life insurance can help bridge this disparity because death benefit payments are generally exempt from federal estate taxes. This feature makes life insurance an attractive investment and wealth-transfer vehicle for many foreign nationals with US-based assets.

• Covering potential estate taxes
  The US government imposes estate taxes on worldwide assets for US citizens, and on US-situated assets for non-residents. US-denominated life insurance can provide the liquidity needed to cover potential estate taxes without having to sell all or a portion of these holdings, preserving the estate's value for heirs.

In addition to comprehensive life insurance protection, whole life insurance can also aid portfolio diversification. These policies build cash value at a guaranteed rate and are among the lower-risk financial products. A policy can build US-denominated cash value that can be accessed while the policyholder is still alive, acting as an effective hedge against economic downturns in one's home country, fluctuating exchange rates, and other forms of geopolitical risk.³ And because life insurance policies are generally protected from creditors and bankruptcy, they may provide an additional layer of protection for foreign nationals' assets.⁴

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.

Find a Guardian financial professional

Frequently asked questions about international life insurance coverage

Does life insurance work internationally?

It depends on the terms of the policy. Generally speaking, if there are no travel restrictions in the policy, life insurance purchased in the US will cover the policyholder if they travel or move overseas, as long as premiums are paid and the policy is still in force. However, due to increased risk, many domestic insurance companies will not write a new policy for someone who is moving abroad or has already done so. Specialized international life insurance companies will issue policies that work in much the same way as regular life insurance; however, these policies may have more restrictions and limitations, and premiums are typically somewhat higher.

What happens to my life insurance if I leave the country?

In many cases, if you have a life insurance policy purchased in the United States, and it is still in force when you move abroad, the policy will pay the stated death benefit to your beneficiaries. However, some policies may include travel restrictions, so it's important to carefully read the terms of your policy beforehand. Otherwise, consider an expat life insurance policy for your protection needs.

Can foreigners buy life insurance?

Yes. Foreign nationals can typically qualify for the same kinds of life insurance coverage as US citizens, as long as they have permanent legal resident status in the US. Non-permanent residents and visa holders will generally find it more challenging to get coverage, but limited coverage may be available from some providers.

Certain high-net-worth, non-resident, non-US citizens may also qualify for life insurance from a US carrier if they have substantial US-based assets and/or family members. Specialized programs, such as Guardian’s Global Citizens Program, focus on addressing the unique challenges of these international clients.