Iul for foreign nationals what insurance company underwrites

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Knowledge Center

Meet Gen Re

Gen Re delivers reinsurance solutions to the Life & Health and Property & Casualty insurance industries.

Gen Re completed an extensive secondary research review back in 2022 of U.S. insurance companies’ guidelines and practices for underwriting High Net Worth Foreign Nationals. Our U.S. Research Center team had also conducted one of our Market√Checks relating to this business. The results are still relevant today - and we thought some insurers would want to refer to our recommended checklist for insurers.

While High Net Worth Foreign Nationals (HNWFNs) typically represent less than 1% of U.S. insurers’ in force Individual Life premium, according to our survey, there may be valuable business opportunities within this niche market.

Definition

For purposes of this blog, High Net Worth Foreign Nationals (HNWFNs) are individuals of any citizenship outside of the U.S. with substantial U.S. connections and a demonstrated need for U.S.-based Life insurance coverage.

One takeaway to note is the importance of producing or collecting documents and premiums within the U.S. so that they are supported by laws within the U.S. jurisdiction.

Our last U.S. Market√Check industry review on the topic found:

• Claims – None of the survey respondents indicated claims were worse than expected.
• Locations – Among most survey respondents, the most prevalent locations for HNWFN clients were Canada, Mexico, and/or South America. Latin America and East Asia were the next most prevalent regions. Business from Western Europe and the Pacific Rim was noted but not widespread.
• Mortality Risk – One of the biggest challenges to companies is trying to appropriately assess mortality risk for HNWFNs without the availability of traditional U.S. underwriting tools. Prescription database checks, motor vehicle records, U.S.‑like Attending Physician Statements/electronic health records, background checks, third-party verification of income and net worth, medical claims data, credit attribute scores, or tools such as LabPiQture, may only be partially available or not available at all.

Considerations for Insurers

Based on Gen Re’s experience with HNWFNs, along with our industry research, we’ve compiled a checklist for insurers writing business, or thinking about writing, in this niche market.

It’s important to know a country’s laws and regulations regarding their citizens buying life insurance from U.S. insurers. The laws governing the sale of life insurance may apply beyond the country or jurisdiction.

Insurer Checklist

• All policy correspondence should go to a U.S. address. This includes starting from the solicitation and all related aspects of the sale/application – from the initial contact, completion of application, medical exam, inspection report, and any other requirements. All should take place within the U.S. – up to and including the policy delivery.
• Cover letters and other aspects of sale/application should be completed in English to facilitate underwriting, unless companies are staffed to work with other languages.
• For ease of doing business and to avoid litigation around the understanding of contract language, proposed insureds should be fluent in English. Some companies may not find this to be necessary.
• Unless your company is licensed outside the U.S., don’t allow delivery or provision of company written materials or references, or any related workflows outside of U.S. jurisdiction. This includes not allowing workflows through U.S. consulates, embassies or “in transit” locations such as an aircraft or watercraft.
• A U.S. bank account should be required to pay premiums.
• Don’t allow only a U.S. domiciled trust or LLC to be an acceptable nexus for writing the business.
• Don’t allow offshore ownership. Historically, this has too often been associated with fraud.
• Consider requiring that the proposed insured be physically present in the U.S. for at least 30 days in the prior 12 months. (For information on how proposed insureds can provide such information, see the U.S. Customs’ website: https://i94.cbp.dhs.gov/I94/#/home.)
• Ask for a copy of the proposed insured’s passport to understand foreign travel, and to see when he/she enters and departs from U.S.
• Ask the applicant to respond to a foreign residence/travel questionnaire. If help is needed with designing this questionnaire, Gen Re is happy to assist.

For Policy Delivery / Premium Payments

• Obtain a policy delivery receipt for all Foreign National policies that includes signing location and an attestation stating the receipt is being signed in the U.S.
• Premiums should be paid from a U.S. bank account and all policy correspondence to go to a U.S. address.
• The initial premium and all subsequent premium payments should be drawn on the U.S. bank account of the named insured, owner or payor listed on the application.
• Some carriers may have provisions in place to work with other currencies and foreign addresses, but this was not widespread in our review. Money orders should not be accepted for initial or ongoing premiums.
• All post-issue communications regarding the policy should be mailed to a street address of record within the U.S.
• Ensure the address in the U.S. is not the address of the agent/agency or affiliate.
• P.O. Boxes should not be allowed.

For Agents / Producers

• An Agent/Agency should not have any POA privileges related to the life insurance policy. They should not be trustee or have trust-related powers, nor should they be an officer in an LLC that owns the life insurance policy.
• Establish post-issue owner and beneficiary change tracking and reporting at your company, and ideally review reports monthly, but no less frequently than quarterly, for any activity that isn’t in your company’s best interest.
• Work only with production sources that have a multi-year proven track record of writing high-quality business in this market.
• Visit the agencies in advance of licensing them, and vet them thoroughly. Establish which specific agents can sell this business and vet them thoroughly as well. Query your reinsurers to see if they have any insights about producers being considered.
• Understand how HNWFNs are identified and referred to the agency. Carriers may wish to work solely with proposed insureds referred by large, well-respected money managers, accounting firms, private banks, investment companies or law firms. Doing otherwise may attract proposed insureds who are not truly HNWFNs.
• Require a detailed cover letter from the producer that outlines their relationship with the proposed insured, the proposed insured’s background, the need for coverage, and how the solicitation took place.
• Require that all agency marketing material for the HNWFN market be reviewed and approved by your company.

For Underwriters

• Normal full underwriting age-and-amount requirements.
• We recommend establishing issue ages at 24‑65. Younger and older age individuals in this market can present unique challenges.
• Consider underwriting only proposed insureds with a verifiable net worth of at least $10 million (U.S. equivalent) and annual global income of at least $1 million. These are higher thresholds than some companies establish. We recommend a higher threshold to attract individuals who have access to the best healthcare.
• Consider requiring proposed insureds to own a home in the U.S., purchased at least 12 months prior to your insurance application, with a current market value of at least $2 million, and to provide evidence of time at the residence, or to have one of the following acceptable nexuses:
  • Conditional Green Card or EB 5 Visa
  • Employed primarily in the U.S.
  • Owns a business in the U.S.

  Travel

  • Check the U.S. State Department Travel Warning site for all countries outside the U.S. in which the proposed insured spends significant time. https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories.html
  • To help with the validity of mortality results, consider limiting coverage to proposed insureds from countries whose average life expectancy is equal to or better than it is in the U.S. https://www.worldometers.info/demographics/life-expectancy
  • Some carriers, of course, may choose to consider a broader range of countries of citizenship.

  Banking

  • Ask the applicant to respond to personal financial questionnaires, one regarding U.S. assets and one for foreign assets.
  • Obtain copies of current U.S. bank/investment account statement(s) and copy of such statement(s) from six months prior (or documentation of when the account(s) was/were opened). Obtain an accountant’s verification of income and net worth and be sure to vet the accountant.

  Medical Records

  • Comprehensive, multiyear Attending Physician Statements records that verify completion of age-appropriate well care from a major U.S. medical practice, or international peer medical practice, such as The Mayo Clinic, Johns Hopkins, etc.
  • For ages ≥40, the comprehensive APS should include at least two years of medical records and a full physical exam within the last 12 months.
  • Translation of medical records completed by a U.S. translation service that has been vetted by the insurer. Producer/Agency or family member translations of medical records should not be accepted. Popular vendors for translation services include:
    • CoventBridge
    • First Financial
    • LanguageLine
    • TransPerfect

    Recommended Prohibited Proposed Insureds

    • Foreign politically exposed persons (PEP)
    • Foreign missionaries
    • Foreign military/police
    • Professional athletes
    • Journalists
    • Public figures
    • Celebrities

    We hope these insurance process checklists, from the initial solicitation contact to the policy mailing, will help insurers with their business. We welcome your thoughts, questions or suggestions. Contact your Gen Re account executive if we can help you.

    Resources

    Popular Vendors for Background Checks/Inspection Reports:

    • Black Peak
    • CoventBridge
    • CRL Plus
    • Diligence International
    • First Financial
    • LexisNexis