Life Insurance: What Is an Alien Insurer?

In the area of life insurance, you might hear the term "alien insurer" thrown around about a particular company. Here are the basics of what an alien insurer is and what it means to you.

Alien Insurer

An alien insurer is that is doing business in a country but is located outside of the jurisdiction of that country. For example, if you are living in the United States, if you purchased insurance from a company in Canada, this company would be considered to be an alien insurer.

Rules

In order to do business in a foreign country, the company is going to have to adhere to the rules of that country and state. If the insurance company from Canada wanted to sell policies in New York, they would have to abide by the same rules as any other life insurance company that does business in New York.

Implications

Sometimes, purchasing a life insurance policy from an alien insurer can provide you with a lower premium or better benefits. However, you need to be aware that there is some risk involved with working with these companies. Since they are outside of United States jurisdiction, you do not have the same protection as you do with domestic companies.

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