Term Insurance is a type of life insurance that compensates the family members or nominees if the policyholder's demise occurs within the policy period. Such a policy is quite helpful for the financial security of the family. Yes, NRIs (Non-Resident Indians) can buy term insurance in India. However, choosing the correct term insurance policy for NRI is critical to guarantee cross-border financial security and stability. This article explores the complexities of non-resident individual term insurance plans, examining their nature, functions, varieties, and potential investors. Read ahead to learn everything about Term Insurance for NRIs.
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For everyone, life insurance is vital. Protecting your loved ones when you're away, whether you live in India or elsewhere, is imperative. For NRIs, term insurance is very crucial because, should you pass away, your family may find it difficult to support themselves while living abroad. Your family can move to India, take care of their necessities while they're away, find possibilities for a comfortable existence, and much more with the money they receive while you're gone.
A term plan gives your family an extra layer of crucial financial security. It can assist them in getting the money they need to meet their financial obligations and aspirations under challenging times. Term plans play a significant role in the financial portfolios of NRIs, Overseas Citizenship of India (OCIs), and Persons of Indian Origin (PIOs).
30-year-old Arjun wishes to safeguard his loved ones in the improbable event that he passes away too soon. He pays ₹ 50 a month for a 10-year, ₹ 5,00,000 term life insurance policy.
Arjun's beneficiary will receive ₹ 5,00,000 from the policy if he passes away within ten years.
There won't be any payout to his beneficiary if he passes away after the policy's expiration.
The premiums will be more than for his first coverage if he lives and renews it after ten years because they will be based on his current age of forty instead of thirty (premiums based on age).
When the initial insurance term ends and renewability, Arjun most likely won't be able to renew it if he receives a terminal illness diagnosis.
Term insurance for NRIs also works like regular insurance.
The policyholder must pay a fixed premium for assured coverage for the selected period. If the policyholder dies in this period, the nominee gets the sum assured amount.
NRIs also have the option of Return of Premium (ROP). This option allows them to recover the total premium payments when the policy matures if the policyholder survives the policy period. They can also supplement the policy with add-ons for improved coverage.
Term life insurance for NRIs typically has similar policies available to residents. Four types of term insurance policies:
A word used to describe a provision in many term life insurance contracts that permits renewal without requiring fresh underwriting is "renewable term." With a renewable term policy, the insured's health can deteriorate, but the renewed premiums will represent their advanced age.
As long as the policyholder continues to pay the insurance payment, convertible insurance enables the policy owner to convert a term policy that only covers the insured individual for a certain number of years into an endless policy.
A term life policy with a decreasing death benefit is known as decreasing term life insurance. It's advantageous if you anticipate that your loved ones will require less financial assistance over time.
With adjustable life insurance, you can modify the policy's terms after enrolling, such as the premium amount and the death benefit. Known also as universal life insurance, adjustable life policies have a "cash value" account, a savings component that accrues interest, that you can use while living.
For the protection of their family, an NRI can purchase a pure term plan, which provides comprehensive life cover protection, a death payout, and no maturity advantages. Buying term insurance is as easy for an NRI as for an Indian resident in India.
NRIs can apply for term insurance in two ways:
Here are some interesting features of NRI Term Insurance.
The following factors should be considered before buying an NRI Term Insurance plan.
Policy tenure: NRIs must put a lot of thought into the policy duration when buying term insurance. It can be as low as six months and extend to 40 years. Experts advise having coverage for at least until you turn 65 years old. Usually, your age should fall between 18 to 55 or 65 years, depending on the insurance company's requirements.
Policy coverage: You must also decide the policy amount wisely for the insurance policy. It is vital to make an informed decision because the amount you choose must be adequate for your family in case they lose you. Consider factors like debts, inflation, education expenses, and significant events like marriage or childbirth to choose the appropriate amount and type of policy. Choosing an escalated policy amount will secure your family against rising inflation. You can also go for a policy that automatically increases the sum insured by a specific rate every few years.
Some common riders that are available for term insurance are:
It improves your loved ones' financial security by guaranteeing an additional amount in the event of an accident-related death.
This helps compensate for medical costs and lost wages while recovering by providing a lump sum payment upon diagnosis of certain serious diseases.
This rider guarantees that future premium payments will be waived in case of accidental disability, job loss, etc. The policy remains active for the rest of its term. This ensures continued coverage for the insured and their beneficiaries without the burden of premium payments.
When a terminal disease is diagnosed, the Terminal Disease Rider accelerates a portion of the death benefit, enabling you to pay for medical expenditures and fulfil your final wishes.
One of the most important things you can do as an NRI in terms of financial management is to get yourself a term insurance policy. Term insurance is a crucial component of your emergency plan that provides financial stability for your family. As a non-resident Indian, purchasing a term plan is comparable to buying the plan as a resident. However, you do have further options to secure the cover. There are a few things to think about while choosing and purchasing term life insurance:
Verify the insurer's claim settlement ratio to ensure a greater chance of hassle-free claim settlement and a sign of dependability.
Choose insurers with a strong internet presence for simple access to customer service, convenient policy management, and premium payments.
Examine the insurer's claim settlement procedure to see if it is efficient, clear, and trouble-free to ensure a more seamless claims process.
Assess the insurance company's persistency ratio to determine policy retention rates and customer satisfaction, as these metrics indicate the business's reliability.
To fit your convenience and financial choices, look for insurers that offer various payment options, including annual, monthly, quarterly, or half-yearly premiums.
NRIs need the following documents to apply for Term Insurance.
NRIs should buy Term Insurance in India rather than abroad for the following reasons.
The eligibility requirements for term insurance as an NRI (non-resident Indian) vary based on the insurance company and its policy. However, here are some standard eligibility criteria.
You must typically be between 18 and 65 to be eligible as an NRI.
You must have a valid NRI status and reside in a country on the insurance company's approved list of countries.
You must provide information about your medical history, including any pre-existing conditions and medications you take.
Some insurance companies may restrict specific work profiles, such as those considered high-risk.
You will need to make premium payments in the currency specified by the insurance company, which may require you to have a bank account.
You must provide certain documents, such as your passport, visa, and proof of residency, as well as any additional documentation required by the insurance company.
It's important to note that the eligibility requirements vary widely between insurance providers, so it's always a good idea to check with the specific provider to determine their needs for purchasing Term Insurance as an NRI.
Below are some of the frequently asked questions on Term Insurance Plan for NRI
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.
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