How do foreigners get a life insurance policy in the USA

February 13, 2019


Foreigners often buy a life insurance policy in the United States, since the American version is quite profitable. The cost of a life insurance policy issued in the United States is usually cheaper compared to products offered in other countries, and in some cases can offer great benefits, such as a guaranteed universal life insurance policy that may not be available in other countries.

Family income


The most obvious reason to buy a life insurance policy is to protect your family. A policy purchased in the United States will provide protection regardless of the place of residence insured after it was purchased. The policy will remain in force as long as you pay for it. In the event of the death of the insured, the entire amount of the policy will be paid in US dollars to the beneficiary (beneficiary) upon presentation of the death certificate.

Future income along with protection for loved ones


A life insurance policy can serve as protection for the family of the insured person, as well as a way of obtaining future savings for the insured himself. “Cash value” is a part of the coverage that can be used by the policyholder during life. As a result, insurance policies can generate non-taxable dividends, which can lead to a substantial increase in your cash value over time. 
Payments from the Cash Value are provided to the insured upon his request, as a rule, free of charge, that is, they should not be returned back. Also, these payments are not taxable.

Property tax


Although US citizens and residents are exempted from property tax of $ 11.2 million (adjusted for inflation), non-resident foreign citizens - those who are not US citizens and have their main place of residence in another country, usually do not pay tax on the property only up to $ 60 thousand. The cost of residential real estate in the United States, acquired by foreign buyers, will almost always exceed this amount.


In addition, the top tax rate increased from 35 percent to 40 percent in 2013. 
This means that if a non-resident foreign citizen owns a place of rest in the United States, his heirs may face a tax of up to 40 percent of the market value of the house in effect at the time of the owner’s death.

The smart way to protect an inheritance from a possible high tax obligation to pay real estate tax is a life insurance policy. The US Tax Code considers life insurance for the life of a non-resident foreign citizen, rather than “located within the United States” and, therefore, is not included as part of the gross property in the United States.

Simply put, the death benefit is not payable on property tax in the United States upon the death of the insured person and should not be inferior to the heirs and/or beneficiaries. Acquiring a life insurance policy in the amount of the estimated property tax can help ensure that the heirs and beneficiaries of a foreign non-resident citizen will have the funds necessary to pay any assessed property taxes in the United States.