When a beneficiary lives outside the United States, the claims process may require additional communication, documentation, tax, and payment considerations. Agents can help reduce potential delays by encouraging policy owners to keep beneficiary information complete and current before a claim occurs.
Identifying Foreign Beneficiaries Early
One of the most important ways agents can help support a smooth claims experience is by encouraging policy owners to provide complete beneficiary information at the time of application and whenever a beneficiary designation is added or updated. Missing or outdated information can delay claim communication, delivery of claim forms, and payment.
Agents should encourage policy owners to provide as much beneficiary contact information as possible, including the beneficiary’s full legal name, mailing address, phone number, email address, and country of residence.
Because the available methods for adding or updating beneficiary information has different limitations, policy owners should provide as much contact information as possible whenever beneficiary information is added or updated.
Email addresses are especially important for beneficiaries who live outside the United States because email may be one of the fastest and most reliable ways for Claims to communicate requirements and request documentation.
If an agent becomes aware that a beneficiary has moved outside the United States, the agent should encourage the policy owner to update the beneficiary’s contact information as soon as possible to help avoid unnecessary delays if a claim is filed.
Check out the article below for more information on beneficiaries:
The Power of the Portal: Updating Beneficiaries
Reporting and Processing a Claim
A beneficiary living outside the United States can report a death by emailing claims@nationallife.com, calling 800-732-8939, or visiting the Claims section under Contact on nationallife.com.
To help Claims locate the policy and begin the process, the beneficiary should provide the insured’s full name, policy number (if available), date of birth, Social Security number (if available), date of death, and the beneficiary’s mailing address, email address, and phone number.
After the report of death is received, the initial claim packet is typically sent within five business days. The packet will outline the specific requirements needed for the claim. For beneficiaries who reside outside the United States, additional documentation may be required, including IRS Form W-8BEN, which is used to certify foreign status and determine whether U.S. tax withholding applies.
Payment Considerations
Foreign beneficiaries often have questions about how they can receive payment, how long payment may take, whether funds can be wired, and whether the benefit is taxable.
Payment options may include check sent by traceable mail, wire transfer if the receiving bank accepts U.S. funds, or settlement options available under the contract. Available options may depend on the contract, the beneficiary’s country of residence, banking details, and any required Treasury or compliance review.
Additional review may be needed if the beneficiary resides in, or payment would be sent to, a country subject to Office of Foreign Assets Control restrictions or other sanctions concerns. In those situations, Claims may need to work with Treasury to determine what payment options, if any, are available.
Tax Considerations
Foreign beneficiary claims may involve U.S. tax withholding and reporting requirements. The requirements may differ depending on whether the claim is for a life insurance policy or an annuity.
For life insurance claims, if a fully completed Form W-8BEN is not received, 30% withholding may apply to the death claim interest paid on the benefit. If a fully completed Form W-8BEN is received, withholding is generally not required on the death claim interest.
For annuity claims, withholding may apply to the taxable portion of the death benefit. If a fully completed Form W-8BEN is received, withholding is determined based on the applicable tax treaty between the United States and the beneficiary’s country of residence. If a fully completed Form W-8BEN is not received, 30% withholding is required on the taxable portion of the death benefit.
When applicable, NLG will issue Form 1042-S the following year to report U.S. source income paid to a foreign individual and any withholding taken.
What Agents Can and Cannot Do
Agents can help by encouraging policy owners to keep beneficiary information current, providing Claims contact information, helping beneficiaries understand the information Claims may need to locate a policy, and referring beneficiaries to IRS instructions for Form W-8BEN.
Agents should not advise a beneficiary how to complete tax forms, interpret tax treaty rules, tell a beneficiary whether their benefit is taxable, or promise a specific payment method or timeline before Claims and any required internal review are complete.
Beneficiaries with questions about Form W-8BEN should be referred to the IRS instructions or a qualified tax advisor.
The companies of National Life Group and their representatives do not offer tax or legal advice. For advice concerning your own situation, please consult with your appropriate professional advisor.
TC9005319(0726)3
