A Guide to U.S. Life Insurance for Global Citizens

Are you a high-net-worth foreign national (global citizen) with business, financial, or personal ties to the United States? If so, you’re part of a rapidly growing group of global citizens navigating complex U.S. estate, tax, and wealth-transfer rules. A U.S. life insurance policy can be one of the most powerful and tax-efficient ways to protect your family and preserve wealth across generations. Below is a clear, actionable overview of why U.S. life insurance may be right for you.

U.S. Life Insurance for Global Citizens

For affluent non-U.S. residents with U.S. exposure, life insurance offers several compelling advantages for Global Citizens:

1. Estate and Wealth Preservation A life insurance death benefit provides immediate liquidity to your heirs - cash that can be used to pay debts, taxes, and expenses without having to liquidate valuable assets.
   

2. Liquidity for U.S. Estate Tax Planning

   Depending on your tax residency, you may face significant U.S. estate taxes. Life insurance can provide the funds needed to cover this liability, preventing forced sales of U.S. real estate or business interests.
   

3. Income Tax–Free Death Benefit

   Under U.S. tax law, life insurance death benefits are generally excluded from federal income tax for beneficiaries.
   

4. Tax-Deferred Cash Value Growth

   If you choose a permanent life insurance policy, any internal cash value may grow on a tax-deferred basis.
   

5. Supports Business Succession Planning

   For business owners, life insurance can fund a buy-sell arrangement or partnership transition, ensuring stability for heirs and business partners.

Understanding U.S. Estate Taxes: Resident vs. Nonresident Alien

Your exposure to U.S. estate taxes hinges entirely on whether the IRS considers you a:

• Resident Alien (domiciled in the U.S.), or

• Nonresident Alien (not domiciled in the U.S.)

This classification has major estate-tax implications and should always be reviewed by cross-border tax counsel.

Why Life Insurance Is Especially Valuable for Nonresident Aliens

If you are a Nonresident Alien, you are only subject to U.S. estate tax on property considered U.S. situs assets. Here’s the key advantage:

Life insurance is generally not considered U.S. situs property. That means a nonresident alien can own a U.S. life insurance policy, and the death benefit is typically not subject to U.S. estate tax, making this one of the most efficient wealth-transfer strategies available for global families.

Estate Tax Comparison

ILIT Planning for Resident Aliens

If you are classified as a Resident Alien, your worldwide estate, including life insurance owned personally, is subject to U.S. estate tax.

To keep the death benefit out of your taxable estate, the policy is typically owned by an Irrevocable Life Insurance Trust (ILIT). This trust must be drafted by a qualified attorney and requires careful administration, but it is a well-established planning tool for high-net-worth families.

Who Qualifies for U.S. Life Insurance?

Life insurance carriers offer coverage to high-net-worth foreign nationals, but approval requires meeting specific financial, nexus, and underwriting requirements.

Key Eligibility Requirements

Minimum Net Worth:

• At least $5,000,000

Substantial U.S. Nexus (must meet one or more):

• Ownership of U.S. real estate or a U.S. business

• Employment with a U.S. company

• U.S. estate-tax exposure

• Immediate family residing in the U.S.

Financial Presence:

• An active U.S. bank account

• At least $200,000, or 25% of the applied-for coverage amount, in U.S. assets

Premium Requirements:

• All premiums must be paid from a U.S. bank account

• Solicitation and underwriting must comply with U.S. carrier rules

Each case is evaluated individually, and underwriting for foreign nationals typically requires enhanced financial documentation and medical records.

Next Steps for Global Citizens

U.S. life insurance provides a unique combination of liquidity, tax efficiency, and cross-border planning advantages - making it a powerful tool for global families with U.S. connections. Acquiring U.S. life insurance for global citizens involves complex legal and tax considerations, it’s essential to work with:

• A qualified international tax attorney

• An experienced life-insurance broker

• Your family office or wealth advisor

If you’re ready to explore how U.S. life insurance can strengthen your global wealth-transfer strategy, please schedule a time to talk with our firm to discuss your goals and determine the right approach for your situation.

This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. The tax and legal references attached herein are designed to provide accurate and authoritative information with regard to the subject matter covered and are provided with the understanding that neither TRC Financial, nor M Financial are engaged in rendering tax, legal, or actuarial services. If tax, legal, or actuarial advice is required, you should consult your accountant, attorney, or actuary. Neither TRC Financial, nor M Financial should replace those advisors.