Quora Answer: Can I Name Non-Resident Parents as Beneficiaries to My Life Insurance in the United States?

The following is my answer to a Quora question: “Can I name non-resident parents as beneficiaries to my life insurance in the United States?”

In the United States, the beneficiaries must have insurable interest.  In general, this would be the parents, the children, the spouse, the business partner, and anybody else where you can prove that they would financially disadvantaged by your passing, or our inability to provide.  As such, you can most certainly name your parents as beneficiaries, regardless of their citizenship or residency.

Since the US has an estate tax, there are limits, which apply at federal and state level, on how much a non-citizen may claim.  This is because the US government does not want large amounts leaving the country without any reasonable recourse to getting the estate tax paid.  This means that if your insured amount is above the stipulated limit, which varies, your parents may not claim the entire amount.  The alternative is to assign your policy to an irrevocable trust, and make your parents the beneficiary.  This also has the advantage of mitigating their tax liability on the claim, and bypassing the probate process.

Singapore has no such limits on nomination of beneficiaries, and you may nominate any legal person, including a company or institution.  Insurable interest applies only during the application process, and pertains to the relationship between the policy owner and the life insured.  Singapore does not have an estate tax, and no limits on a claim.  There are limits on how much a person may be insured for.  It is, form the moment, $10 million for life, and up to $3 million for critical illness and disability.  To apply for higher coverage, the financial advisor must write in with additional documentation to justify it.