A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Car Insurance Agent

UPDATED: Feb 15, 2017

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Don't miss these facts...

  • Unknown underwriting data about illegal people is a big problem
  • Underwriting mistakes can cost lost of money
  • The right way to procure life insurance for illegal residents

Restrictions for illegal immigrants

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You just cannot get around the fact that if you are an illegal individual in the United States, you are going to be somewhat restricted in some areas. One of these areas is the purchase of life insurance from most companies.

One of the most basic criteria of underwriting is that the life insurance company will do just about anything to keep from being saddled with an adverse risk.

That risk could be that an illegal person has skimpy documentation about his or her past. Are they criminals, a part of a terrorist faction, or are they just an average person attempting to make it?

Learn more about life insurance for illegal immigrants and make sure to use our free comparison tool above!

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The Law is the Law

An illegal immigrant as far as the United States is concerned a person who is violating the immigration laws of the USA.

The problem is that too many illegal people in a country can overwhelm the resources of the host country.

Schools, hospitals, housing and employment, are all areas that are affected, and with not much ability to have any foresight into how to manage all of the chaos that ensures strains everyone.

Life Insurance Underwriting and Illegal People

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When a citizen of the United States applies for a life insurance policy, the application calls for a social security number, a work permit number, or other documented ways to determine who a person is. Questions on the application apply to experiences and contacts here in the United States.

How is an underwriter who is attempting to evaluate a risk going to be able to make decisions that come from a makeshift hospital in the rural areas of Burma, Bangladesh, or rural Mexico?

It is easy to see the problem because to qualify for life insurance coverage a person has to prove some continuity of background and the records that support that background.

This is impossible for many immigrants, legal or illegal.

Life insurance companies also do not look favorably upon people who are in the process of committing a crime, and people who come to this country illegally are in the process of committing a crime.

The Ramifications of an Underwriting Mistake

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The citation of an actual life insurance situation will serve to illustrate the horrible results of a bad decision on the part of a life insurance underwriter. A policy was sold to a Mexican “businessman” with a $2 million death benefit.

The first monthly premium was paid, which amounted to a few thousand dollars.

Premiums were continued until about the eighth month or so of the policy, and a death claim was submitted.

The death claim stated that the airplane that the insured was traveling in crashed in the mountains of Mexico and there were no recognizable remains to identify.

All of the appropriate documents were submitted, a death certificate, a flight plan of an airplane, the name of the pilot as well as the passengers, of which there were two, the dead insurance client and a business associate.

The payment of the claim was held up because of the difficulty of getting any further proof that the dead insured existed in the first place. The more the investigation wore on, the less proof was uncovered.

Finally, the case was broken when it was discovered that the beneficiary of the policy was a company that did not even exist, but it had a good paper trail.

These were expert insurance company investigators, but it took them almost another 12 months to get to the bottom of the issue.

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Insurance Agents Could Be Breaking the Law

Some of the biggest avenues for money laundering are the policies from life insurance companies such as cash value life insurance and annuities.

The perpetrator buys a high cash value policy or early cash annuity, and then after a year or two cancels the policy and takes whatever cash is available.

Insurance agents of all kinds have take training on “Anti-Money Laundering” so they can be aware of possible schemes like this.

The person trying to move the money doesn’t care if the cashed out policy does not return the entire amount of money, as it was all free to him in the first place if it was stolen.

False Identification Papers

There is a huge underground industry in the falsification of documents for illegal immigrants. It is very difficult to tell the difference between:

  • fake driver’s license
  • employment paperwork
  • electric bills
  • deeds
  • legal documents
  • social security cards
  • green cards

If an insurance agent knows he or she is selling an insurance policy based upon these falsified documents, he or she could be held as accessories to a federal crime.

The Life Insurance Underwriting Process

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If you have ever purchased life insurance, you probably remember the amount of detail that is required in filling out the application

The first part of the application is mostly personal information, such as name, address, past addresses, occupation, how long at that occupation, and dates to go along with the jobs and addresses.

Within that segment of information, the applicant is asked for his or her social security number.

Next, comes the health information, and this can get quite detailed.

There is a list of medical ailments as long as your arm, and along with “yes or no” the insurance company wants details about the medical condition, as well as the name, address, the telephone number of the doctor, and all of the dates you saw the doctor.

Then depending upon the size of the policy, financial information may be required and questions about tobacco and alcohol usage.

Some policies still require references. How is an illegal person going to come up with answers to all these questions in a satisfactory way? It is next to impossible. In addition to all of the above, a language problem would just make the situation worse.

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The Best Path

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Illegal people do have the possibility of applying for a legal work permit.

Of course, this puts that person “on the radar,” so to speak, but once the work permit or the green card is in effect, it is more than likely that he or she will be able to qualify for some life insurance.

This is because the status of the person is legal as he or she is legally allowed to stay here in this country for a time to work.

Who Qualifies For a Work Permit?

Suffice it to say that there are various types of status that allow foreign nationals the right to apply for a work permit.

They must apply, fill out the paperwork and stay “visible” to the immigration department.

There is a required photo ID, and proof of a thorough background history of the person’s home country is required.

When an individual qualifies and receives the work permit, he or she is allowed to work and use the work permit, or green card as a means of identification. This card will also make it much easier for the individual to purchase life insurance.

In Conclusion

Reputable life insurance companies are going to follow the law on immigration as closely as possible, as it can cost them lots of money if they just run out and insure anyone.

Without knowing a lot about an individual, a life insurance is not likely to offer to insure that person.

Can you imagine the hordes of people coming into the United States from all of the areas which are still war zones, in the middle east, the Balkans, and from South America?

Most of these people have no paperwork, and if they do have it, it might be forged. The chances of getting false information are very good, and unless the information can be verified, it is probably not going to work.

It would be nice for the illegal immigrant if there were some magic bullet, but the meaning of the word illegal means something, and as for the life insurance company it is a big red flag.

Until the illegal person becomes legal, chances are slim that he or she will be able to get any life insurance coverage on their own.

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