Everyone in the life insurance business knows there are attractive opportunities in the foreign nationals market. Isn’t just the size of this market, which continues to grow. These prospects have what every life insurance advisor dreams about: need, urgency and means.
If that isn’t enough, this market offers the possibility of writing large cases with motivated high-net-worth individuals.
But the question remains: Given all the hype about the foreign nationals market, why are so few producers active in it?
Here are some reason why advisors may be “taking a pass” on the foreign nationals market:
They’re not sure what’s involved.
They are uncertain about being successful.
They think it’s too difficult to get up to speed.
They don’t know how or where to start.
While advisors may see the opportunity, even the lure of getting into a market with a burgeoning number of high-net-worth prospects with a need for substantial amounts of life insurance, that alone doesn’t seem to be enough to sway them.
The problem isn’t that this is a new market. Advisors are always jumping in when they see opportunity. They may be “taking a pass” on this market because they view it as different from what they’ve been doing.
If that’s the mindset, here is what an advisor needs to know to move forward in the foreign nationals market.
1. The prospects
The first step is to have a clear picture of the prospects. For example, target:
Non-Resident Aliens who own U.S. assets but reside permanently in another country. Also, Non-Resident Aliens who are working professionals and who spend considerable time in the U.S.
Resident Aliens or foreign nationals living in the U.S who own assets subject to U.S. estate tax and U.S. citizens married to non-U.S. citizens.
2. The problems
Each of these three groups has its own issues.
Usually, only those assets located in the U.S. are subject to federal estate and gift tax. But they are allowed a $13,000 tax credit, which only protects the first $60,000 of an estate from estate taxes.
Worldwide assets are subject to U.S. estate and gift tax. Also, they do not qualify for certain tax advantages afforded to U.S. citizens, creating a need for careful estate planning. And they may be subject to expatriation taxes when they are no longer U.S. residents.