What if my life insurance beneficiary is in another country? [Updated 2021] (2024)

It is no secret that the world is becoming more and more globalized each day. We are easily connected with friends, family or business partners across the globe. Therefore, it is no surprise that very often we ran into the question: What if my life insurance beneficiary is in another country? Is that possible, are there any things to consider and how does it work? In this guide, we’ve decided to answer these questions and address the most common concerns.

Here is what we would cover

Insurable interest – what exactly it means and why does it matter

Can my life insurance beneficiary live in another country?

Tips of naming beneficiaries when they live abroad

The process of collecting the death benefit

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If you are an expat, living abroad or you simply would like us to review your personal situation and provide you with an advice, just reach out to us. You can do so by filling the instant quote form, send us a message or simply give us a call. We specialize in life insurance for foreign nationals.

Insurable interest – what exactly it means and why does it matter?

Prior to reviewing the topic, we need to turn out attention to the term “insurable interest”. It is important to understand what exactly it represents and how it applies to you.

…Insurable interest is the basis of all insurance policies…Life insurance regulations have evolved to require a relationship in which the policy owner will suffer a financial loss in the event of the insured’s death…

What does this mean?

Simply put, your beneficiary needs to suffer a financial loss should you pass away. The purpose of life insurance is to put you in the same financial situation prior to the loss. There are many examples, where insurable interest is obvious – spouses, children, business partners and etc.

Insurable interest is one of the biggest questions you may face when your life insurance beneficiary is in another country. What type of financial hardship he or she will face if something were to happen to you? Below are some examples of cases we’ve encountered in our practice.

Example 1:

We helped a gentleman secure a life insurance policy. His fiancee was still in Columbia and due to family reasons, she couldn’t join him in the US. They are engaged and he is assisting her financially.

Example 2:

The son is living in the US, but his parents are living in Mexico. He does not have any other relatives in the US and his parents would be paying for his burial should something happen to him.

In both scenarios, our clients have named a foreign national as a beneficiary on their life insurance policy. We’ve also dedicated a separate article on how to name a foreign national as beneficiary.

Can my life insurance beneficiary live in another country

We would be direct and give you a straightforward answer: Yes, you can name someone as life insurance beneficiary even if they are not living in the US. Again, the biggest concern is “why” they are your beneficiary and what is their insurable interest in your life.

Tips of naming beneficiaries when they live abroad

There are several things you can do ahead of time to ensure that your beneficiary would be able to access the life insurance coverage:

Ensure that you have their complete and accurate information listed on the beneficiary field on your policy.

This includes:

Full legal name
Date of birth
Social Security Number, if available
Relationship
Address
Email address and phone number

You want to make sure that the carrier would have ways of reaching out to the beneficiary and also confirming his or her identity

Give the beneficiary the policy information – this may seem straightforward, but it is a step that is oftentimes overlooked. Make sure that your beneficiary has the following information:

Company Name and phone number
Policy number
Coverage amount
Are there any other beneficiaries listed on the policy? If yes, they would also need to contact the company

Give them your agent’s information – this might be one of the best things you can do. It would ensure that they have a point of contact that they can reach out to directly, should something happen. In many instances, it is easier to work directly with someone, rather than a corporate office.

The process of collecting the death benefit

This is without a doubt the most important question, how a life insurance beneficiary claims the death benefit if he or she lives in another country. To answer the questions, we’ve parted the answer based on whether he or she is able to come to the US.

The beneficiary is able to return to the US – if this is the cases, the process would be fairly simple

Notify the carrier or agent for the death of the insured and file a claim
Complete the claim form and provide the carrier with identification paperwork, current address, proof of death and etc.
Once the carrier receives the completed claims form, they will review the case.

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Please keep in mind that if death occurs within the first 2 years since the policy is issued, it will fall into the contestability period.

The contestability period is a standard for EVERY insurance company out there. It allows them to contest the claimif death occurs within the first 2 policy years. They can review the application, the medical history of the insured, and the events surrounding his or her death. If they find misrepresentations, they have the right to deny the claim

Pro Tip:

Always be upfront and honest with the carrier. Do not try to hide a medical condition, misrepresent your income and etc. This could only give them a reason not to pay, should something happen to you.

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For additional information, you can reveiw our guide on Will my life insurance pay if I die aboad?

The beneficiary is not able to return to the US – this would make the process a bit lengthier. Companies may have to mail the death claim package and wait for it to be mailed back. Luckily, many companies are able to work with individuals in an effort to make the process less complicated and more straightforward. It is possible for the carrier to wire the life insurance benefit to the beneficiary.

Last thing to consider:

Any possible tax consequences for the beneficiary. Typically, the life insurance benefit is tax-free for the beneficiary in the US, therefore it is often used as a wealth preservation tool by foreign nationals. . This may not be the case of the country where the beneficiary resides. Please consult with a tax advisor to get accurate advice.

In conclusion,

If your life insurance beneficiary is in another country, you can still list him or her on your policy. You would need to make sure that he or she has an insurable interest in your death and also have ways of reaching out to the life insurance company.

Thank you for going through the article and we are looking forward to answering any questions you might have.

As a seasoned expert in the field of life insurance, particularly specializing in coverage for foreign nationals, I can confidently address the concepts discussed in the provided article. My extensive experience and in-depth knowledge of the subject matter enable me to shed light on key elements such as insurable interest, naming beneficiaries in other countries, and the process of collecting death benefits for international beneficiaries.

Insurable Interest – Foundation of Insurance Policies: The article correctly emphasizes the significance of insurable interest as the bedrock of all insurance policies, particularly life insurance. Insurable interest refers to the financial loss a policy owner would suffer in the event of the insured's death. This concept ensures that life insurance serves its purpose by restoring the beneficiary to the same financial position as before the loss. Examples cited, such as spouses, children, and business partners, demonstrate common instances of insurable interest.

Can Life Insurance Beneficiary Live in Another Country? The article asserts that it is indeed possible to name a beneficiary living in another country. The crucial factor is establishing the "why" behind choosing that particular beneficiary and understanding their insurable interest in the policyholder's life. This underlines the importance of considering the potential financial hardships the beneficiary may face in the event of the policyholder's death.

Tips for Naming Beneficiaries Abroad: The article provides practical tips for ensuring accessibility to life insurance coverage for beneficiaries residing in other countries. These include comprehensive information on the beneficiary, sharing policy details, and providing the beneficiary with the agent's contact information. These steps facilitate smooth communication and ensure the beneficiary can readily navigate the process in case of a claim.

Process of Collecting Death Benefits for International Beneficiaries: The article delineates the process of claiming death benefits based on whether the beneficiary can return to the US. For beneficiaries able to return, the process involves notifying the carrier, filing a claim, and undergoing a standard review. However, for beneficiaries unable to return, the process may be more complex, involving mailing claim packages and considering potential tax consequences in the beneficiary's country of residence.

Contestability Period and Pro Tips: The mention of the contestability period within the first two years of policy issuance highlights a standard practice across all insurance companies. The article wisely advises policyholders to be honest and transparent with carriers to avoid potential claim denials. This aligns with industry best practices and fosters trust between policyholders and insurers.

Consideration of Tax Consequences: The article wisely advises policyholders to consider possible tax consequences for beneficiaries in different countries. While life insurance benefits are typically tax-free for US beneficiaries, tax implications may vary in the beneficiary's country of residence. The recommendation to consult with a tax advisor demonstrates a nuanced understanding of the global implications of life insurance payouts.

In conclusion, the provided article offers a comprehensive guide for individuals contemplating life insurance with beneficiaries in other countries. The expertise showcased in addressing insurable interest, naming beneficiaries abroad, and the intricate process of collecting death benefits underscores the author's authority on the subject matter.