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5 elements to success in the international risk market

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International Markets is not for the uninitiated. If you’re just getting – or even thinking of getting – into this arena, don’t be afraid to ask for help: Mentor with seasoned producers who specialize in international insurance business; snuggle up to the international underwriting experts at your company/ies; attend seminars that feature international topics. There are a number of logistical pitfalls that need to be understood and navigated. Below are five of the more critical elements to keep in mind.

1. Most reputable U.S.-domiciled insurers require all solicitation (even e-mailing, phoning and faxing!), applications, exams, inspections, and delivery of the policy to occur while the proposed insured (“PI”) is legally present in the U.S. You should plan accordingly, which means being prepared with all necessary (and correct!) forms, because your meeting with a PI may occur during only a very small window when the client is available to you in the U.S. If the PI leaves before completion of the sales process (delivery of the policy), any forms you may have missed will require that they return to the U.S. – something that may not occur right away (without a special trip). Some companies allow the PI to sign a limited Power-of-Attorney (“PoA”) in connection with the delivery of the policy. Consider obtaining this proactively in case an anticipated return to the U.S. (for delivery) gets interrupted, or if the PI leaves unexpectedly. Under a PoA, someone designated here in the U.S. (an “Attorney-in-Fact”) can help resolve delivery requirements if the Proposed Insured is unavailable as a result of unforeseen circumstances.

2. International risk assessment includes looking at three components: a person’s residency, a person’s travel destinations (including duration and frequency), and a person’s citizenship or nationality. Risks located in some countries are simply not insurable due to conditions in the region (war, famine, disease). In other circumstances, a country’s insurance laws may preclude insurability by a U.S. carrier that is not authorized in the residency country. Travel destinations also need careful scrutiny to ensure there is (similar to residency, but shorter-term) no exposure to those same hazardous conditions. Lastly, in some rare instances, certain countries have laws that prohibit their citizens from obtaining foreign life insurance coverage.

3. Be extremely detailed (as you should be, even with domestic risks!) about medical histories, as foreign travel or residency can heighten medical vulnerabilities that may otherwise be more easily addressed in the U.S. Potentially-volatile histories – like coronary disease, diabetes, respiratory disorders, or multiple impairments – can become life-threatening if crises occur in a country that doesn’t have “western” standards of medical care. Even where such care is available, other factors – like poor infrastructure or language barriers – can affect the outcome of a medical emergency.

4. The same detail pertains to financial histories, especially when a PI has worldwide assets. U.S. financial allowances are based, in part, on an individual’s projected estate tax liability, but for individuals not exposed to U.S. estate tax it may be more challenging to justify amounts applied for. Many countries have lower – or no – estate or transfer taxation compared to the U.S. When taxation needs are minimal or absent, international financial risks often are determined on traditional income replacement and/or asset protection parameters.

5. As mentioned in the opening paragraph, get to know your international underwriter(s). Ideally, underwriting should be a trusted partnership between the producer and the risk analyst. The more information you can provide, the smoother the process can be. Where there are grey areas, a solid, trust-based sales-underwriting partnership is the best way to ensure a mutually-beneficial risk outcome for the PI, the producer, and the company assuming that risk. 

For more information on working with foreign national clients and their life insurance needs, visit Transamerica’s Foreign Nationals Connection website.

Transamerica Life Insurance Company and its agents and representatives do not give tax or legal advice. This material and the concepts presented here are for information purposes only and should not be construed as tax or legal advice. Any tax and/or legal advice you may require or rely on regarding this material should be based on your particular circumstances and should be obtained from an independent professional advisor.