Life can be unexpected and while we cannot control what happens to us, we can certainly ensure we and our family are able to sail through such situations. Term insurance is one such plan that can alleviate the financial burden off our family's shoulders after the demise of the policyholder. While Indians living in India can easily get insurance plans both online and offline, it is the NRIs who used to face issues back then. With the advent of the Internet, this scenario has also changed for the better.
Can NRIs purchase term insurance in India?
NRIs have a right to purchase an NRI term insurance plan in India. Insurance companies have tailored the term insurance for NRI plans to their individual requirements and demands.
NRIs can obtain life insurance policies under the Foreign Exchange Management Act (FEMA).
What is the Procedure for NRIs to purchase term insurance?
When you purchase term insurance you are securing your family's financial future, ensuring that insufficient funds won't hinder their opportunities in life. They can purchase term insurance online or during their next visit to India.
Here are the two options for NRIs to purchase term life insurance:
1. A term plan can be purchased during their next trip to India: After completing the underwriting procedure, the term life insurance is given the same status as any other term insurance purchased by an Indian individual. To achieve a smooth claim settlement process, every insurance applicant must be entirely upfront throughout the underwriting procedure.
2. If a visit is not possible due to some reason, one can get term insurance for NRI in the country they are presently staying in through Mail Order Business. A notary, an Indian diplomat, and an official from the Indian Embassy must all verify the term insurance policy.
Features of the NRI Term Insurance Policy
The policy tenure for term insurance for NRI typically ranges from 6 months to 25 years. Another requirement for obtaining a term plan is that the individual must be at least 18 years old. The maximum age range for term life insurance is often 55 to 60 years old, depending on the terms of the policy. The following are some of the aspects of a term plan policy for NRIs.
Premium and Sum Assured: The death benefit for a term insurance for NRI term plan might vary from ₹2 lakhs to ₹1 crore. The sum assured can also vary depending on the policyholder's occupation, place of residence, and income. The term insurance premium is determined by the tenure, chosen sum assured, frequency of term insurance payment, choice of riders, In the tragic case of the insured member's death, the death benefit is paid to the nominee via the NRE account.
NRIs get a grace period: Failure to pay the premium may result in a lapse of coverage. However, insurance companies offer a grace period which extends the premium payment period. If the policyholder makes the payment during this extension, the policy will not lapse. Typically, the grace period is 15 days.
Renewal of Term Plan: When your term plan reaches maturity, you have the option to renew. During renewal, the insurance applicant is expected to take a medical exam to determine the revised premium amount. Typically, the premium amount increases at the time of insurance renewal.
Online Premium Payment: NRIs can use internet banking to make term plan payments. The service requires the policyholder to have an approved bank account that allows for online banking with the insurance provider. To avoid lapses and make regular payments, it is best to understand the relevant terms and conditions. Some of the choices include foreign currency remittance, an NRO bank account, and an NRE/FCNR bank account.
Documents needed: The following documents are required for term insurance for NRI:
Proposal form
Provide proof of age and income
Medical report
Attested passport copy.
Some additional documents may be required if the insurance is obtained from a mail-order business.
Things to Consider Before Buying the Term Plan for NRI
Before investing, it's important to disclose any pre-existing medical concerns to avoid any claim settlement issues. Familiarize yourself with the term insurance for NRI claim settlement process to ensure a seamless experience for your beneficiaries.
Read and understand the policy's terms and conditions, including exclusions and claim settlement procedures.
Choose a life insurance provider that has a proven track record and a good reputation.
So we are saying,
For NRIs, term life insurance offered by Indian insurers provides an appealing option to protect their families' financial futures back home. With low-cost coverage, rupee-denominated payouts, and potential tax benefits, provide peace of mind and security. NRIs can make decisions by carefully assessing their needs, analyzing available options, and getting assistance from professionals.
Disclaimer: No Business Standard Journalist was involved in creation of this content