Addressing Life Insurance Needs of High Net Worth Foreign ...

Addressing Life Insurance Needs of High Net Worth Foreign Nationals

FOR FINANCIAL PROFESSIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.


TA B L E O F C O N T E N T S

1 High Net Worth Foreign Nationals

2 MassMutual®’s High Net Worth Foreign Nationals (HNWFN) Program

4 Why Would Foreign Nationals Consider U.S.-Based Life Insurance?

5 Why MassMutual?

6 Eligibility Requirements/Guidelines for High Net Worth Foreign Nationals

7 Nexus Eligibility Guidelines

8 Underwriting Requirements

9 Frequently Asked Questions

12 Appendix


1 Source: Capgemini, World Wealth Report 2018

Who are Foreign Nationals?• Non-U.S. citizens residing outside of the United States; OR • U.S. citizens residing outside the U.S. for an extended period of time

MassMutual’s High Net Worth Foreign Nationals (HNWFN) program can help you secure the U.S.-based life insurance protection your foreign national clients need when they have income or asset ties to the U.S.

High Net Worth Foreign NationalsThe number of high net worth individuals around the world is increasing rapidly, and this trend is expected to continue over the next decade, particularly in countries in the Middle East, Latin America and Asia. In fact, Asia Pacific contributed 42.4% to the global high net worth population growth.1 A significant number of these wealthy individuals have a portion of their interests or assets inside the U.S., and these clients may qualify for coverage under our High Net Worth Foreign Nationals program.

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2FOR FINANCIAL PROFESSIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.

Wealth Preservation Foreign residents may be able to use U.S. life insurance to enjoy estate tax advantages.

EXAMPLE: Thomas, a wealthy citizen and resident of Austria, who spends a few weeks annually in the U.S., would like to purchase insurance to provide a legacy for his children residing in the United States and to preserve the family vacation home in Miami. The death benefit will provide an inheritance to his children and funds to ensure their second home is kept in the family. Were he a U.S. citizen or resident, he would be subject to taxes on all of his worldwide assets.

Estate Tax Funding and Other Liabilities at Death Foreign residents may have an estate tax liability for assets within the U.S. and other inheritance or income tax liabilities both in the U.S. and in the country where they are citizens/residents. U.S.-based life insurance may be an effective way to fund the U.S. based estate tax liability.

EXAMPLE: Bridgette, a citizen and resident of Monaco who spends about one week a month in the U.S., has accumulated a $25 million net worth from her family’s yacht business in her home country, but with their expansion to the east coast of the United States, she expects this number to double in a relatively short time. She expects to have some exposure to estate or inheritance tax here in the U.S. To help with this liability, as well as other potential liabilities associated with her death, she decides that she needs a life insurance policy that will be owned by an irrevocable life insurance trust (trust situs to be located in the United States). The policy will not be included in her gross estate for U.S. tax purposes. As estate taxes in the U.S. are due within 9 months of the date of death in cash, this policy will provide the cash when it is most needed.

MassMutual’s High Net Worth Foreign Nationals (HNWFN) ProgramMassMutual’s HNWFN program is designed to help foreign nationals with a global net worth of $5 million or more, assets or interests in the U.S., and a demonstrated need for U.S.-based life insurance obtain U.S. life insurance. Many of these individuals and couples have a need for a substantial amount of life insurance to meet a variety of current and future financial needs that include:

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FOR FINANCIAL PROFESSIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.3

Business Planning For foreign residents with business interests in the U.S., life insurance may be a critical part of succession planning.

EXAMPLE: Patrick, a resident and citizen of Ireland, is a one-third shareholder of Oceanside Glass, a successful glass manufacturing company with plants in both Dublin and Boston. Patrick spends several weeks annually in the U.S. He and the other two equal shareholders, both U.S. citizens based in the United States, are working with an attorney to draft a buy/sell agreement to cover the transition of their business in the event of a death, retirement, divorce, or disability of one of the shareholders. They are moving forward with a redemption agreement. A U.S.-based entity must be used as the owner. Appropriately funding the agreement based upon the current value of the business is crucial to ensure the money is available to carry out the terms of the buy/sell agreement. It also helps ensure that heirs receive the fair market value of Patrick’s shares in Oceanside Glass.

Income Protection Foreign residents often have substantial income. U.S.-based life insurance may be an effective way to protect their earning power.

EXAMPLE: Monica, an Italian citizen and resident, has amassed a significant net worth through her work as an actress and her current work as head of a movie studio in Los Angeles. She wants to protect the substantial income she earns as the head of Bond Productions and U.S. based assets. Her ex-husband resides in the U.S. with their three minor children, yet she spends most of the year in Italy, coming to the U.S. monthly for meetings. With a U.S. life insurance policy, she is able to ensure the death benefit will be available to replace the loss of her income should she die prematurely. This same policy could be designed to supplement her income in retirement.

For the above scenarios, ownership must be a U.S. entity. If the ownership is properly structured, proceeds will not be subject to income or estate taxes in the United States. HNWFN policy ownership is limited to either a U.S. individual or a U.S. entity. (Please see the Eligibility Requirements section for more information.)


Why Would Foreign Nationals Consider U.S.-Based Life Insurance?There are many reasons foreign nationals might want U.S. life insurance:

• Financial assets and beneficiaries may be located in the U.S.

• Amount of coverage needed may not be available in their country of residence

• Cash value and death benefit are paid in U.S. dollars

• Availability of more suitable life insurance products, premium rates or underwriting

• Income and estate tax advantages

• Funding U.S. tax liabilities

Overall, U.S.-based life insurance can be an important part of a foreign national’s long-term financial planning as long as he or she has established a connection to the U.S. and has a financial need for the amount of life insurance requested.

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Why MassMutual?MassMutual offers advantages that appeal to prospects in the international markets:

Stable and Reliable

• Highly rated and ranked among the top U.S. life insurance companies based on financial strength and stability.3

• MassMutual is a FORTUNE 500®4 company and one of the largest mutual life insurance companies in America.

• Received the “World’s Most Ethical Companies” award from Ethisphere in 2020.5

Attractive Product Offering

• We offer a suite of high-quality whole life insurance products. Our participating whole life policies are extremely competitive among U.S. mutual companies.

• MassMutual is an industry leader in whole life insurance sales.

• We have paid dividends on participating whole life policies every year since 1869, demonstrating a commitment to providing long-term value to policy owners. Dividends are not guaranteed.

Expertise and Support

• Advanced Sales support is available to help you and your clients navigate legal and financial planning concerns.

• A dedicated team of experienced underwriters handles our High Net Worth Foreign Nationals applications, so you can be assured of accurate handling and the best possible underwriting decisions based on information received.

• Proven ability to package high face amount cases leveraging our strong reinsurance relationships.

3 Ratings apply to Massachusetts Mutual Life Insurance Company and its subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company. Ratings are as of 10/1/2021 and are subject to change. A.M. Best Company: A++ (Superior; top category of 15); Fitch Ratings: AA+ (Very Strong; second category of 21); Moody’s Investors Service: Aa3 (High Quality; fourth category of 21); Standard & Poor’s: AA+ (Very Strong, second category of 21)

4 From FORTUNE®. ©2021 FORTUNE Media IP Limited. All rights reserved. FORTUNE 500 (June 2021) is a registered trademark of FORTUNE Media IP Limited and is used under license. FORTUNE and FORTUNE Media IP Limited are not affiliated with, and do not endorse products or services of, MassMutual.

5 Source: ethispere.com, Worlds Most Ethical Companies, 2020

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E L I G I B I L I T Y R E Q U I R E M E N T S / G U I D E L I N E S F O R H I G H N E T W O R T H F O R E I G N N AT I O N A L S

Insurance Age 18–70

Minimum Face Amount $10,000,000

Net Worth A global net worth of at least $5 million, plus a proven nexus/connection to the U.S. (See Nexus chart below).

Eligible Countries Residents of A and B countries are eligible, with the exception of Japan, Spain and France due to national laws. Please refer to the latest country classification chart.

Plans and Riders Participating whole life products only; Life Insurance Supplement Rider (LISR) and Additional Life Insurance Rider (ALIR) may be available.

Foreign National Definition

• Non-U.S. citizens residing outside of the United States. or • U.S. citizens residing outside the U.S. for an extended period of time (more

than 6 months for “A” countries and more than 3 months for “B” countries).

Table Ratings Maximum rating of medical Table D.

Aviation A private aviation exclusion rider is required for private pilots and flight crews flying to other than “A” countries.

Occupation Exclusions We cannot consider politicians, public figures, government employees, judicial leaders, law enforcement, trade union officials, religious leaders, missionaries, journalists, security consultants, humanitarian aid workers, field engineers, archaeologists, geologists.

Politically Exposed Person (PEP)

We cannot consider PEPs. A Politically Exposed Person (PEP) means a current or former senior foreign political figure, their immediate family, and their close associates. Please refer to the full definition in the appendix as needed.

Premium Finance May be considered. (Please see appendix for more information).

Disclosure Form U1011 Foreign National Disclosure Form is required for residents of Argentina and Panama and for any other countries as deemed appropriate by the underwriter.

Identification, SSN or Tax ID

A W8 BEN form is generally acceptable. W-8IMY formA national identification number is needed for foreign citizens.

Pre-paid Applications No pre-paid (TLIR) applications are accepted.

Policy Ownership • Policies insuring foreign nationals (non-U.S. residents) generally are required to be owned by a U.S. resident individual or entity, and generally are not permitted to be owned by a non-resident person or entity.

• For insureds residing in European Union countries (including United Kingdom), Argentina, Panama and China, policies must be owned by a U.S. individual or entity.

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Applicant/Proposed Insured must meet BOTH requirements in Column 1, and at least one requirement listed in each of columns 2 and 3.

High Net Worth Program Requirements (Both of the following are required)

High Net Worth Nexus(One of the following)

High Net Worth Additional Requirements (One of the following)

Annual U.S. travel of at least 15 days in the preceding 12 months Verification: copy of all pages of passport.

Owns real estate in the U.S.Verification: Warranty deed, property tax statements or mortgage statements.

U.S. Tax LiabilityVerification: Copy of most recent U.S. tax return for the past 2 years (business and/or personal), 4506T.

ANDMinimum global net worth of $5,000,000Verified income and U.S. assets will support the amount of coverage and premium. Verification: See banking tie verification, foreign tax returns.

OROwns a U.S. businessVerification: Most recent tax return with Schedule C and/or K1, copy of DBA, Articles of Incorporation, stock ownership documents, share certificates, Articles of Organization.

ORSpouse and/or children residing legally in the U.S.Verification: Copy of immedi-ate family member proof of U.S. citizenship, naturalization or 10-year green card.

ORWorks for a U.S. companyVerification: W2, tax return or employment verification letter.

ORU.S. assets minimum 25% of global net worthVerification: See banking tie verification.

ORHas a banking relationship with a U.S. bank or financial institution for at least 6-12 months. Minimum $250,000 balance required.Verification: Last 6 consecutive months of bank, money market, CD, brokerage or other asset statements, or financial institu-tion letter of introduction from a private bank.

N E X U S E L I G I B I L I T Y G U I D E L I N E S

1 2 3

Note: Verifications must be in English and U.S. Dollars

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All application-related activity must occur in the U.S.

Identity Requirements • Copy of all pages of the passport from Proposed Insured’s country of residence. (Copies of other passports used may be requested.)

• National Identification Number for foreign citizens. This typically is found on national identification cards or passports, usually next to or below the name or date of birth.

• Copy of visa. (An approved I-797 may be accepted in lieu of a visa).

Underwriting Requirements (Medical)

All published U98 Age and Amount requirements, PLUS: • An EKG is required for ages 40 or older• An Exercise Stress Test is required for insurance ages 61–70

A comprehensive Attending Physician Statement (APS)* is required for ALL cases:

• For ages ≥ 40, the comprehensive APS should include: 3 years of medical records and a full physical exam within the last 12 months.

• For ages 60+, there are no exceptions to the comprehensive APS requirement of 3 years of medical records and a full physical exam within the last 12 months.

A letter from the doctor does not fulfill this requirement.Please wait for your underwriter to advise you before ordering these requirements.As always, underwriters may order other requirements as deemed appropriate.*(See the full definition in FAQs below.)

Foreign Supplement A fully completed F6290 Foreign Supplement is required for all applicants/proposed insureds.

Inspections An Inspection Report will be ordered by underwriting for all proposed insureds.

Phone Interviews (SHQs, PHIs)

Must be done in the U.S.

Translations • The appropriate FR1119 Acknowledgment Regarding English Language Materials and Translation form is required if the applicant/proposed insured is not fluent in English.

• APS and other medical results must be provided in English. We will reimburse a maximum of $250 for translations done by an approved vendor only.

• Exception: We are able to translate Spanish records.

Pre-Screen Questionnaire

COR1999mmsd High Net Worth Foreign Nationals Pre-Screen Questionnaire is required for all HNW applicants/Proposed Insureds before submitting an application.

U N D E R W R I T I N G R E Q U I R E M E N T S

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FAQs for MassMutual’s High Net Worth Foreign Nationals programThe following FAQs pertain only to applicants/proposed insureds (PI) in MassMutual’s HNWFN program. Please review the Nexus chart for program eligibility. A need for U.S.-based life insurance must be demonstrated. Foreign nationals in A and B countries only are eligible.

Is this program limited to certain advisors? No. All advisors are eligible; however, we expect a limited number of advisors to participate in this market. Advisors not currently working in this market may wish to consult with their GA or sales advisor before considering an application.

Are advisors required to take training or become certified to sell in this program? No. However, advisors should familiarize themselves with program requirements and must use the COR1999mmsd High Net Worth Foreign Nationals Pre-Screen Questionnaire to vet applicants/PIs.

Why do I need a pre-screen questionnaire? The pre-screen form (COR1999mmsd HNW Foreign Nationals – Pre-Screen Questionnaire) must be submitted to the Large Case Underwriting team prior to submitting an application, in order to determine eligibility for the program. Complete all questions thoroughly and accurately to avoid finding out later that your client is ineligible. This should be done before any application is taken or submitted.

Which underwriters handle this business? A dedicated group of our Large Case Unit underwriters handles these files.

Are requirements for HNWFN program applicants/PIs different from requirements for foreign nationals who live in the U.S.? Yes. An APSs, EKG, or an Exercise Stress Test may be needed, even though not listed on the current U98 Life Underwriting Requirements chart. Please review the advisor materials for the HNWFN market for special requirements and details. Be sure that EKGs and exercise stress tests are ordered from examiners when required. Only approved Vendors may be used.

Are Waiver of Premium or LTC Rider available? Only ALIR and LISR are available.

What countries are eligible for this program? Residents of A and B countries are eligible, except for Japan, France, and Spain due to laws in those countries. See Appendix for a link to the country classification list.

Must clients be in the U.S. for a certain length of time? Yes. Annual travel to the U.S. is required for at least 15 days in the preceding 12 months. Passport verification is required.

Do assets need to be verified? Yes. Please consult the Nexus Eligibility Chart or High Net Worth Foreign Nationals Advisor Checklist (LI7378sdp) for acceptable verifications. Verifications must be in English and in U.S. dollars.

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Why must lab results be done by MassMutual examiners? Can’t I use another company’s lab work? Current labs done for MassMutual are required because we need to order additional lab tests on HNW clients. This applies to all non-U.S. residents. If prospects have labs from another provider, and we are unable to obtain our required testing, they will need to have new bloodwork done by MassMutual examiners in order be considered. Keep in mind that any new or existing labs received will be fully underwritten, meaning they could improve, worsen, or have no effect on our decision. If there are no MM labs new enough for us to order all required tests (< 25 days old when received by the underwriter), the file will be not be considered until a new blood draw is provided. TIP: Advisors will want to keep the timing of a client’s lab work in mind in connection with application submission.

*Guidelines state that a comprehensive APS is required. What do you mean by “comprehensive”? • Ages ≥ 40 years: the comprehensive APS should include 3 years of medical records AND a

full physical exam within the last 12 months.

• Ages 60-70 years: no exceptions to the comprehensive APS requirement of 3 years of medical records AND a full physical exam within the last 12 months.

• A letter from the doctor is not sufficient. Without this comprehensive APS, we may need to limit the final decision to no better than Standard class, IF we can consider at all.

What about translations of APS and other information? APS and other medical results must be provided in English. We will reimburse a maximum of $250 for translations done by an approved vendor only. (Note: MassMutual is able to translate Spanish records.) Please refer to the approved vendor list on FieldNet.

Are there any legal considerations?• Residents of Argentina and Panama must sign and submit a U1011mmsd Foreign National

Disclosure form, indicating they understand there may be legal consequences for securing U.S. life insurance as a resident of their country.

• Power of Attorney (POA) delivery signatures are not allowed.

I have a potential client for this market. How can I get my questions answered?• Consult with Advanced Sales on the case design, as needed. See contact information in

the Appendix.

• Complete and submit the pre-screen form COR1999mmsd High Net Worth Foreign Nationals Pre-Screen Questionnaire to the email board listed on the form. An underwriter will review it and communicate with you about next steps.

What if my foreign national client does not qualify for the HNWFN program?Your client may not qualify due to not meeting net worth criteria or nexus, or based on the face amount requested. A non-HNWFN client may be underwritten “business as usual” under regular Foreign National guidelines, if qualifications are met.

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What else do I need to know?

• All application-related activity must be completed in the U.S., from solicitation to application to delivery. Advisors are required to attest to this, as are applicants/PIs.

• Please refer to the High Net Worth Foreign Nationals Advisor Checklist for application pre-submission and submission guidance.

• Please carefully review the Nexus Eligibility Chart in the High Net Worth Foreign Nationals Advisor Checklist and above for the required connections to the U.S. Applicants need a reason for U.S.-based life insurance.

• Important: Please provide underwriting with the country of residence in your communi-cations, in addition to the country of citizenship. This is required in order to effectively underwrite a foreign national. The country of residence is where the applicant/PI spends the majority of the year, has family, works, or does business, receives mail, etc.

• If we are unable to obtain the required medical information, the risk class may be restricted to Standard at best.

• Underwriting guidelines and requirements are subject to change without notice as world conditions change.

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Appendix

Who are Politically Exposed Persons? (PEPs)• A “senior foreign political figure” is a senior official in the executive, legislative, adminis-

trative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a senior foreign political figure includes any corporation, business, or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

• The “immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children, and in-laws.

• A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.

Premium Financing for High Net Worth Foreign NationalsPremium financing is acceptable in certain circumstances, just as it is in certain circumstances for U.S. residents. Requirements for premium financing for high net worth foreign nationals:

• Residents of A or B countries only.

• Whole life products only (non-MEC), LISR and ALIR are available. The design requires approval from Advanced Concept Design Group. Paid-Up Additions cannot exceed base policy premium.

• Lender must be U.S. licensed and fully operate within the U.S.

• All financing must be signed off by Advanced Sales, with a separate certification for the trusts or ownership prior to issue. As a minimum, the loan must require current interest be paid at least annually, and the financial design must provide significant long-term death benefit in excess of loans.

• No use of enhanced cash riders.

• A copy of tax returns is required.

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Contact Advanced Sales at 1-800-601-9983, option 2 or email [email protected]

Links:• LI7378sdp High Net Worth Foreign Nationals Advisor Checklist for submitting business

• U1011mmsd Foreign National Disclosure Form• COR1999mmsd High Net Worth Foreign Nationals Pre-Screen Questionnaire• UW email board: [email protected] for submitting the

Pre-Screen Questionnaire

• Country classification

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