Foreign nationals and nonresident aliens with U.S. business interests are a rising target market for life insurance agents. The ability to prospect and tap into a nonresident alien or foreign national client base provides a number of advantages for insurance agents. The ideal foreign client for life insurance is a foreign national who visits the U.S. regularly or owns real estate in the U.S. either solely or together with a spouse who is a U.S. citizen.
Certain life insurance products can serve as powerful financial planning instruments for such clients. The same applies to clients who are U.S. citizens and spend extended periods of time abroad.
Here are some things to consider when prospecting for foreign clients.
1. Estate tax, to which nonresident aliens with U.S. assets including (but not limited to) real estate holdings are subject just as American citizens are. Such nonresidents face a relatively low estate tax exemption from federal taxes, however, compared with the tax exemption for U.S. citizens.
2. The underwriting capacity (risk) limitations within the nonresident’s native country.
3. The “stable” U.S. dollar versus the next best alternative.
4. Economic unrest or unstable government in the nonresident’s country of citizenship. Nonresidents also may fear future socialized or state-controlled fiscal policy in their country of citizenship.
5. Whether the nonresident has
beneficiaries, relatives or business partners in the U.S.
6. Whether the nonresident is involved with any multinational organizations.
7. Assets the nonresident may hold in the U.S., such as investment accounts, real estate or business interests.
U.S. Citizens Spending Time Overseas
What about U.S. citizens who live abroad or spend extended periods (months at a time) overseas for business purposes? This presents a straightforward, ultra-smart marketing opportunity for insurance advisors.
Let’s say that such an individual wants life insurance for family income protection while spending time abroad. Or let’s say that an employer wants a “key person” policy to protect their potential risk exposure for a high-earning executive who spends time overseas.
For an insurance advisor, this type of “special circumstance client” presents both an underwriting obstacle and a lucrative opportunity. Prospecting successfully in this market segment is a matter of working smarter than your competition.
Here is a case study of how to be successful in speaking to, field underwriting for and obtaining coverage for a U.S. citizen who spends extensive time abroad.
The prospect is the 36-year-old head of a multinational entertainment and interactive media corporation. Following the sale of his company, he spent months at a time in Shanghai.
The agent responsible for writing this policy was wrapping up a joint survivorship plan on the prospect’s parents in Boston. The prospect’s mother inquired about what kind of coverage was available for her son, who was a new father and was spending months in Shanghai on business.
Twenty-year term insurance was the ideal. However, in this situation, winning the business of this chief executive of a Nasdaq-traded multinational corporation in Shanghai would require two things. The first was finding a good universal life product to modify to perform like a 20-year-term plan. The second was getting the carrier to agree and underwrite the prospect. Complicating the matter was that the prospect would be traveling back to the U.S., but would be staying in this country for only two days.
Here is the swift course of action that followed:
First, we filed an informal application with Health Insurance Portability and Accountability Act forms collected electronically, and attending physician statements were ordered.
Upon receiving the attending physician statements and informal applications, we reviewed and assessed them to determine a tentative rate.
We ruled out term insurance. So the next best option was to modify a guaranteed universal life plan to run for exactly 20 years to best reflect a term plan.
The prospect traveled from Shanghai to Los Angeles for a two-day stay. Upon his arrival in Los Angeles, the brokerage general agency’s writing agent arranged a medical exam to take place early the next morning at the Hollywood hotel where the prospect was staying.
The examiner was instructed to rush the results of the exam to the carrier. The examiner also was instructed to leave the prospect with a formal application for the universal life plan that was available at the time.
The prospect completed the formal application and electronically sent it — along with a foreign travel questionnaire to the writing agent in Boston.
The writing agent and brokerage general agency drafted a cover letter explaining the applicant’s circumstances and objective in purchasing the insurance coverage. The writing agent finalized the application for submission to the carrier.
The formal application, attending physician statements, cover letter and financial documentation were submitted to the carrier. Forty-eight hours later, the insurer had the medical exam and lab results.
Within a short time frame, the policy was approved and issued at a preferred plus rate at the lowest cost available, using the permanent plan modified to mirror term insurance.
The target commissionable premium was just over $24,000.
Here are some further thoughts about prospecting among foreign nationals and Americans who spend extensive amounts of time overseas.
A large number of nonresident alien and foreign national prospects may not be aware of their estate tax obligations.
Many nonresident aliens and foreign nationals purchasing real estate in cities like Miami, for example, take comfort in U.S. insurer-backed conservative financial planning and income protection vehicles such as fixed life insurance.
Finally, U.S. citizens who spend extensive time overseas often are unaware they can buy life insurance at reasonable rates if the agent is properly prepared and field underwrites with thoroughness.
Richard Whitbeck, CLU, ChFC, FLMI, RHU, is chief marketing officer with Atlantic Insurance Brokerage. He also served as president of Portamedic, national sales manager at AXA Equitable and vice president of marketing for MONY Group. He may be contacted at firstname.lastname@example.org.