Life Insurance And Itins: What You Need To Know

Life insurance is a crucial financial protection for anyone with financial dependents, and certain policies can also act as a wealth-building family asset. While US citizens and permanent residents have an advantage when it comes to getting life insurance, non-permanent residents and undocumented immigrants can also obtain life insurance under certain conditions. One such condition is having an Individual Taxpayer Identification Number (ITIN).

Life insurance with an ITIN is possible, but not all companies will insure you

Life Insurance with an ITIN

If you don't have a Social Security Number, you may still be able to obtain life insurance with an Individual Taxpayer Identification Number (ITIN). An ITIN is a "tax processing number" that the Internal Revenue Service provides to workers who are not U.S. citizens but need a tax number.

Who Needs an ITIN?

Undocumented immigrants, visa holders, and temporary residents may all need an ITIN. An ITIN can be used to open a bank account, file taxes, and purchase life insurance.

Life Insurance with an ITIN is Possible

Yes, you can get life insurance with an ITIN. However, not all companies will insure you. Some companies that offer life insurance with an ITIN include Assurity, Banner Life, Lincoln Financial Group, Prudential, and Transamerica.

Requirements for Life Insurance with an ITIN

In addition to an ITIN, you will typically need to provide proof of U.S. residency, such as a U.S. address and a U.S. bank account. Some companies may also require you to have financial ties to the U.S., such as being married to a U.S. citizen or owning property in the country.

Application Process for Life Insurance with an ITIN

The application process for life insurance with an ITIN is similar to that for citizens. You will need to complete an application, undergo a medical exam or questionnaire, and wait for the insurer to review your application. The entire process must be completed while you are in the U.S., and you may need to provide additional documentation, such as medical records or visa information.

Benefits of Life Insurance with an ITIN

Life insurance with an ITIN can provide financial protection for your loved ones and help with wealth building and transferring wealth to the next generation. It can also offer favorable tax treatment and be used as a tool for global citizens to transfer wealth.

You need a US address and bank account

If you're looking to get life insurance as a non-US citizen, you'll need to meet certain requirements. While the specific criteria vary across companies, there are two essential prerequisites: a US address and a US bank account.

US Address

Having a US address is crucial for obtaining life insurance. This address is necessary for both correspondence and legal requirements. You'll need to list this address on your application and be physically present in the US when signing any policy-related documents or undergoing a medical exam.

US Bank Account

A US bank account is often a prerequisite for getting a life insurance policy. This is because it demonstrates your ability to pay premiums without the complexities of international transfers. Some companies may even require you to have the account established three or more months before applying for insurance.

In addition to these fundamental requirements, insurance companies will also consider other factors, such as your visa status, length of stay in the US, and country of origin. They may also assess your financial situation, including your income, assets, and financial ties to the US.

Your beneficiary will get the death benefit

If you're reading this, you may be wondering what happens when a loved one passes away and you're the beneficiary of their life insurance policy. Here's a step-by-step guide on what to expect and how to navigate the process.

First of all, it's important to understand that as the beneficiary, you need to take action to notify the insurance company of the insured person's death. This is done by filing a claim. The insurance company won't make a payment until the beneficiary files this claim, so it's a crucial step. If you're unsure whether a policy exists, try asking your spouse or parents, or reach out to their advisor, lawyer, or banker. You can also try searching through the Canadian Life and Health Insurance OmbudService or the National Association of Insurance Commissioners' Life Insurance Policy Locator Service.

Once you've located the policy, you'll need to gather the necessary documents to file the claim. This usually includes a death certificate, the policy or an annual policy statement, and a claim form, which can often be downloaded from the insurance company's website. The claim form may require a signature from a medical professional, depending on the cause of death. It's important to submit the claim within the deadline, which can vary from 90 days to 12 months.

After submitting the claim, the insurance company will review it and issue a decision. If approved, the beneficiary will receive the death benefit. This is typically provided as a lump-sum payment, but some insurers may offer the option of receiving it in installments. The death benefit is usually tax-free, and the beneficiary can use it for any purpose, such as funeral expenses, clearing outstanding debts, or investing for ongoing income.

It's worth noting that if the beneficiary is outside the U.S., transferring funds internationally may have tax implications, and the payout process may take longer due to international laws and bank protocols. Additionally, if the beneficiary is the insured person's estate, probate may be required.

In conclusion, while dealing with the loss of a loved one is never easy, understanding the process of receiving the death benefit as a beneficiary can help make this difficult time a little less overwhelming.

You can get permanent life insurance with an ITIN

Yes, you can get permanent life insurance with an Individual Taxpayer Identification Number (ITIN). This is good news for undocumented immigrants who want to protect their family's future. Permanent life insurance, such as whole life insurance, provides coverage for your entire lifetime and can also accumulate cash value.

To get life insurance with an ITIN, you will need to meet certain requirements. Firstly, you must have a U.S. residency address and be able to demonstrate financial ties to the U.S., such as being married to a U.S. citizen, working for a U.S. company, or owning property in the U.S. Additionally, you will need a U.S. bank account, as most companies require premiums to be paid in U.S. dollars from a domestic bank account. You will also need to be in the U.S. for the entire application process, including accepting the policy.

It's important to note that not all insurance companies will approve coverage for individuals with an ITIN. Therefore, it is recommended to work with a brokerage or agent familiar with the unique challenges faced by non-permanent residents and foreign nationals. They can help match you with the right company and advise you on your options for coverage.

When applying for life insurance with an ITIN, you may be required to undergo a medical exam or complete a medical questionnaire. The insurance company will review your application, and if approved, you will need to sign the policy documents and make your first premium payment to activate your coverage.

You can add beneficiaries to your policy

Yes, you can add beneficiaries to your life insurance policy. In fact, it is an important step in owning a life insurance policy. Your beneficiary is probably the reason you have life insurance in the first place, so choosing a beneficiary is crucial.

Who can be a life insurance beneficiary?

Almost anyone can be a beneficiary, including people, organisations and trusts. Common examples include a spouse, multiple people like your children, a charitable organisation, or a legal entity like your company.

Primary vs. Contingent Beneficiary

The primary beneficiary is first in line to receive the death benefit if you die. The contingent, or secondary, beneficiary will receive the benefit if the primary beneficiary dies before you do.

Multiple Beneficiaries

You can name multiple beneficiaries, both primary and contingent, and you can choose how much of the payout each party receives. For example, you might allocate 50% to your spouse, 30% to your child, and 20% to a charity.

Irrevocable vs. Revocable Beneficiaries

An irrevocable beneficiary designation cannot be changed without the beneficiary's approval. This type of designation is useful if you want to ensure that the death benefit goes to a specific person. A revocable beneficiary, on the other hand, can be changed, updated, or removed at any time, offering more flexibility.

Choosing a Life Insurance Beneficiary

When choosing a beneficiary, ask yourself who relies on you financially, who would need financial support for costs incurred by your death, and who you would like to leave money to. You can also avoid mistakes by being specific—instead of writing "spouse", include their full name and other identifying factors so the insurer can locate your beneficiaries quickly.

Naming Children as Beneficiaries

If you die while your children are still minors, the payout can be complicated. Many states allow legal guardians to receive payouts on their behalf, or you can set up a trust for your children and have a trustee oversee the funds.

Naming Your Estate as Your Beneficiary

If you name your estate as your beneficiary, the payout may be subject to estate tax. Even if you have a will, your estate can get held up in probate court, delaying the payout.

If you don't name a beneficiary, the insurer will typically issue the death benefit to your estate. However, this may vary depending on the insurance company, so it's important to know who is first in line.

Changing, Adding, and Removing Beneficiaries

You can usually change, add, or remove revocable beneficiaries at any time, but the methods vary among insurers. Some companies may require a change of beneficiary form, while others allow you to update your beneficiary online.

When to Change Your Life Insurance Beneficiary

It's important to reassess your beneficiaries after major life changes to ensure the right people are protected. For example, if you get married or divorced, have children, or your beneficiary dies, you may want to review and update your selections.

Frequently asked questions