Life insurance tips: 5 underwriting concerns for clients living abroad

Digital nomadism and cross-border living is more popular than ever before.

As a result, advisors are increasingly asked how to structure life insurance for those whose careers, families, and finances span multiple countries.

“The key is designing coverage that remains valid, tax-efficient, and flexible no matter where life takes them,” said Bruce Parker, president at Pan-American Life Insurance Group.

With a bit of knowledge and creativity, advisors can ensure their global clients choose well-structured, U.S.-issued policies that are both portable and adaptable in the long run.

Underwriting considerations

Clients who move frequently or live abroad may have different underwriting considerations than those who reside in the U.S. full-time.

As an advisor, it’s essential to understand how insurers usually assess risk for this demographic. In most cases, they focus on the following:

Residency status and long-term intent

Underwriters look for stability and ties. “This means they prefer a home address, employment status, and assets,” Parker said.

Country of residence and duration

Many carriers classify countries into risk tiers. Longer stays in higher-risk locations may lead to postponements, extra premium charges, exclusions or riders, or in some cases, denials.

Access to medical care and records

Routine care outside of the United States can complicate medical records retrieval. According to Parker, some carriers prefer exams and records sourced in the U.S.

Occupation and activities overlap

Being a “digital nomad” can imply higher-risk activities, such as adventure sports or motorcycle riding. Therefore, underwriters might ask follow-up questions.

Sanctions and regulatory constraints

“Even if the insured is otherwise insurable, there may be restrictions on certain countries for compliance reasons,” Parker explained.

Tax implications to note

Globally mobile clients should work closely with tax advisors to ensure all scenarios are considered before they purchase and fund life insurance.

According to Parker, U.S.-issued policies generally provide the most consistent tax treatment for U.S. taxpayers who are living abroad. Foreign-issue policies, on the other hand, can trigger taxation and complex reporting requirements.

“As with any policy, the cash value, ownership structure, and funding sources can all affect taxation,” Parker added.

Advisors might want to form relationships with experienced tax professionals they can recommend to clients.

How to support these clients

For digital nomads and cross-border clients, the key is to position life insurance as a flexible platform rather than a static product.

“Make it clear that life insurance is part of a long-term strategy and not tied to a single country or job. It’s designed for change, with periodic reviews as residency, income, and family circumstances evolve,” Parker explained.

In addition, prioritize U.S.-issued policies with global portability unless there is a compelling reason to do otherwise. While some international or “expat” policies exist, they often lack U.S. tax advantages and create additional reporting and compliance burdens.

While every global client has their own unique situation and needs, here are a few options and strategies that might benefit them:

U.S.-issued term life for short to midterm needs

”U.S.-issued term policies are generally portable once in force, provided premiums are paid, and there are no restrictions on the country of residence,” Parker said.

Term life support income replacement, mortgage protection, or business obligations while a client is early in their career or in a transitional phase abroad.

Be sure to frame term life as a simple, cost-effective foundation that travels with the client, even if their location changes.

Permanent life insurance for long-term global plans

Permanent policies offer lifetime coverage, tax-deferred cash value growth, and flexibility for estate planning, wealth transfer, or supplemental retirement income.

They’re ideal for clients' long-term global careers, cross-border families, or legacy goals.

“Emphasize flexibility over optimization. Design policies conservatively to accommodate changing residency, income sources, and tax regimes,” Parker explained.

Riders

There are a number of life insurance riders that can be useful for clients who live abroad, experts say.

Flexible premium structures, for example, are particularly important for those with variable or foreign currency income.

Convertibility in term policies allows clients to secure permanent coverage later, even if underwriting would be more difficult once living abroad.

“Critical illness riders, which are one-time payments for any purpose, such as medical costs, caregiving, etc. could be also be valuable for someone diagnosed with a covered serious medical condition in a different country,” Parker noted.

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Anna Baluch is a finance reporter and writer with more than a decade of experience. Contact her at [email protected]