Before we go into all the reasons for targeting this huge business growth opportunity, we should first define the term “Foreign National”. With regard to the US, we might think it refers to “any non US citizen”, but that is not correct. US citizens residing overseas for more than 6 months a year and also US Green Card holders that may be overseas for business opportunities are considered Foreign Nationals. AgencyONE’s focus in underwriting life insurance protection for Foreign Nationals is typically on NON US CITIZENS who either RESIDE in the US or have US NEXUS (interest) in an American business, have a US tax liability or someone in the US (beneficiary) who will suffer a loss upon death of the insured (like a corporation with a CFO from SPAIN).
The current stated RESIDENCE of the INSURED defines one basic underwriting parameter in this market. US Citizens RESIDING in certain countries will be underwritten in the context of their country with specific codes A, B C, D…. and “no thank you”. These country codes fluctuate and are updated as world political climates change and risks rise or fall for residing in certain countries. In many cases, just being a citizen of a “hostile” country can result in a “decline” – even if your client is currently residing in the US – since underwriters are required to consider the possibility that your client may travel back to said country.
There are no cookie-cutter cases in the Foreign National market. These cases can be straightforward or extremely complicated financially. AgencyONE has an excellent fact-finding questionnaire
that will not only help you get started but will give our underwriting team the VALUABLE information we need for directing your case to the right product/premium and best carrier niche. Call the AgencyONE underwriting HOTLINE
to instantly discuss your case or for further information available on this subject from our carrier partners.
Insurance is a heavily regulated business not only in the US but in most foreign countries as well. When dealing with the citizens of another country or persons RESIDING in other countries, you must be aware of the regulatory restrictions that might exist THERE. Just as an agent in Mexico cannot solicit business for his Mexican company from the Houston marketplace, a US based sales representative cannot SOLICIT business outside the US borders….unless of course if he is licensed properly to do that.
SOLICITATION is a buzz word and where the solicitation takes place is of critical importance. As an insurance advisor, you CANNOT get signatures on applications or delivery requirements outside of your licensed jurisdiction. Applications MUST BE taken (solicited) in the US, exams MUST BE performed in the US, and delivery MUST BE completed in the US with all signatures datelined appropriately. For example, a US citizen living in Paris is really no different than a French citizen living in Paris if you are SOLICITING either person while they are in France. This is a violation of THE LAW in France. All your business dealings about specific products, illustrations and representations MUST BE done IN THE United States or you could be violating the law of a foreign country. This is why the US based life insurance companies are so strict about US NEXUS (US financial attachment) and allowing SOLICITATION only in the US. The FINES for a CARRIER violating the local laws are prohibitive if found guilty.
WHY MARKET FOR THIS BUSINESS?
Well, in a nutshell, the financial advisors, the CPA’s and the attorneys that are actively involved with Foreign National clients are looking for help. There is a HUGE tax liability for non US citizens who have assets in the US. THE UNLIMITED MARITAL DEDUCTION DOES NOT EXIST FOR THE FOREIGN NATIONAL CLIENT. While AgencyONE does not give tax advice, you should know that the IRS allows a $60,000 estate tax exclusion on US assets and imposes a 40% TAX on assets above that level UPON DEATH OF THE NON US CITIZEN…..DUE IN 9 MONTHS…IN CASH. Many businesses, a lot more than you might think, are owned in whole or in part by NON US CITIZEN stockholders and executives. With just a $60,000 exclusion and 40% tax bracket, the foreign national client needs to understand the powerful benefits of including life insurance as a part of his/her well-rounded financial plan. Most foreign national clients simply do not realize the consequences of their different tax status as a non US citizen. Again, your knowledge and advice would be a great benefit to the development of your client’s financial plan.
The Foreign National Marketplace is a growing opportunity for the life insurance advisor. The next time you find yourself in conversation with business owners and trust protectors, ask if they know or work with anyone who is NOT a US CITIZEN. You just might find a sales opportunity!
Mr. and Mrs. Jones are Canadian citizens, own businesses in Canada and continue to reside there. They travel to Florida every year and recently bought a condo and two apartment complexes there. Mr. and Mrs. Jones’s US TAX asset base has a market value of $30 million with just $11 million in mortgages remaining. They take NO US INCOME as this would be a double taxation issue for them as Canadian citizens with $19 million in NET ASSETS and just a $60,000 exclusion allowance …..and the properties held by two different LLC’s with 100% ownership interest by Mr. Jones. Upon the death of Mr. Jones, a 40% tax will be due on $19 million of assets (minus the $60K exclusion) or approximately $7.5 million. OUCH. Since Mrs. Jones does not have this kind of liquidity, one of the apartment buildings would have to be sold immediately as the tax would be due…..in 9 months….in cash. AgencyONE put an $8 million policy in place to solve this problem.
Don’t let your foreign national clients be caught uninsured or under-insured. They reside or do business or spend time in the US and have assets in the US for a reason. Care MUST be taken to protect the assets they have accumulated and AgencyONE can help.
Please contact AgencyONE’s Underwriting Department at 301.803.7500 for more information or to discuss a case.