The Coronavirus pandemic has made life uncertain throughout the world. With people losing their lives and livelihood, every precaution possible needs to be taken to ensure safety and security of our loved ones and ourselves. The deadly virus has already infected over 81 million people so far, with more than 1.77 million deaths[1]. Among the countries that have the highest number of infections include the US (more than 19 million cases), India (over to 10 million cases), Brazil (7 million), Russia (3 million), France (2.5 million), Spain (1.8 million) and UK (2.2 million)[1].
Term Insurance for NRIs
In such circumstances, having a term life insurance policy becomes crucial, especially if you have dependents. In addition, when it comes to Non Resident Indians, or NRIs, it becomes even more important because some of their dependents may be living in India while they themselves are living abroad -- maybe for work, for education or some other purposes. If something untoward were to happen, then their families in India may suffer. But if they have a term insurance plan with an Indian insurer, then it would not only protect the financial interests of their families, but would also ensure that the nominees under the policy are able to easily get the sum assured.
According to the data available with the Ministry of External Affairs, there are over 32 million such NRIs and PIOs[2]. And, the Foreign Exchange Management Act (FEMA) has made it possible for them to buy term insurance in India. Moreover, several Indian insurers offer term insurance plans to meet the specific needs of the NRIs.
How can NRIs buy term life insurance in India
Being an NRI, one way you can buy a term insurance plan in India is when you make a visit to India. This is the most convenient option, but it may not be practical for many who are unable to make frequent visits to India. The good news for such NRIs is that they can also purchase a term plan from an Indian insurance company directly, on the organization’s website from their own country of residence.
However, if you buy the term insurance on your annual visit to India, the process is quite similar to what’s followed if an Indian resident makes a purchase. You just approach the insurance company directly or through an agent, and apply for investing in the term plan of your choice. The insurance company would evaluate your case and ask for your medical history. It would also consider the country you reside in and if everything is in order, the insurer will accept your proposal to invest in their term plan along with premium charges as per the terms of the policy that you may have chosen.
However, if you are planning to purchase the policy while staying abroad, you can do so from the life insurance company’s website directly. For example, Bajaj Allianz Life Insurance offers online purchase and renewal of their term insurance plans, depending on your country of residence
By choosing an insurer like Bajaj Allianz Life Insurance, you can make the whole process hassle-free, from filling in the application form to premium payments. Bajaj Allianz Life has a portfolio of innovative insurance products including Retirement plans, Savings Plans, Investment plans, and Child plans, to help you fulfil your life goals. Policyholder can also pay premiums through NRE or NRO account maintained with Indian bank
Documents required
An NRI buying a term plan from an Indian insurer has to submit a set of essential documents that will help the insurance company evaluate the case and process the application. While the requirements may vary from insurer to insurer, here are some most common documents that you may be asked to submit.
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A duly filled in application or proposal form
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An attested copy of your passport with exit & entry details
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Proof of address
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Proofs of your income and earnings
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PAN Card/Form 60
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Recent Photograph
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FATCA questionnaire/declaration
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Medical examination and tests, NRI questionnaire, Travel questionnaire etc. if required
Things to keep in mind
Significance of country of residence: Your country of residence determines your eligibility for a term plan. It is advisable to check the list of countries that your chosen insurer serves
Insurance policy term: This refers to the period from when the policy has been purchased until its maturity or expiry.
Extent of protective life cover: Since term plans are pure protective policies that offer a lump sum payment if the policyholder dies, make sure the cover is adequate to get your family through financial troubles in the unfortunate event of your demise.
Premium amount: The premiums charged by the insurer depend on factors like health, occupation etc. While most of these factors are the same for a resident Indian and an NRI, some are specific to the latter like whether their country of residence is prone to an exceeding amount of political instability. In such cases, you would be required to pay a higher premium amount. If you live in a country known for lesser or no instability, your premium amount would generally be much lower. However, before opting for a plan, you could compare the premium terms offered by different insurers.
There is no doubt that term life cover is essential for every individual, but for NRIs, it is crucial to have an Indian life insurance policy even if they have one in their country of residence. By opting for this, your family back home in India will find that it’s easier to raise a claim to the insurance company in the event that something unfortunate happens to you. Moreover, it would also prove convenient if you decide to return to India later in life.
Source:
1 https://www.worldometers.info/coronavirus/
2 https://mea.gov.in/images/attach/NRIs-and-PIOs_1.pdf
Note - In the present situation of COVID-19 guidelines for NRI Lives are very restrictive, hence one needs to be vary of these points:
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Higher due diligence
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Applied covers restriction
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Restrictions as per Country of residence