Term Insurance For Non-Resident Indians: Exploring Eligibility And Benefits

Term insurance for NRIs (Non-Resident Indians) is a crucial financial tool that offers peace of mind and financial protection for individuals and their families. It is designed to secure the future of loved ones in the event of an untimely death, providing financial security and flexibility to relocate or continue living abroad. The policy term, sum assured, and payment options can be customised to meet the specific needs of NRIs, with coverage ranging from 5 years to 99 years and sum assured from ₹ 2 lakhs to ₹ 5 crores. NRIs can also enjoy tax benefits and convenient payment methods, making it an affordable and hassle-free investment.

Eligibility criteria for NRIs to purchase term insurance in India

Term insurance is a type of life insurance that provides financial security to the family of the policyholder in case of their untimely demise. Term insurance for NRIs (Non-Resident Indians) is particularly important as living in a foreign country can be challenging for their family if they are no longer there to support them. The insurance payout can help the family in various ways, such as relocating to India, meeting their financial needs, and enhancing their quality of life.

NRIs can easily purchase term insurance plans in India, and the process is quite simple and convenient. Here are the eligibility criteria and requirements for NRIs to buy term insurance in India:

Eligibility Criteria:

• The policyholder must be an Indian citizen with a valid Indian passport living abroad temporarily.
• The policyholder must not have applied or must not plan to apply for citizenship in a foreign country.
• The minimum age to purchase a term plan is typically 18 years, and the maximum age limit is between 55 and 65 years, depending on the insurance provider.
• The policyholder must disclose their country of residence, as some insurers have restrictions on offering insurance in specific countries, especially those with political instability.
• The policyholder must provide necessary documentation, including a passport copy, age and income proof, medical reports, and other KYC documents.

Additional Requirements:

• NRIs must provide proof of income, such as income tax returns, employment contracts, or a certificate from a chartered accountant.
• They may be required to undergo a medical examination, either physically or through a tele-medical or video check-up.
• NRIs should ensure timely premium payments to keep their policy active. Most insurers offer a grace period for late payments, after which the policy may lapse.

Benefits of Term Insurance for NRIs:

• Term insurance plans offer financial security to the family by compensating for the loss of income in case of the policyholder's death.
• It ensures that any outstanding debts or loans do not burden the family's finances.
• Term insurance plans can be customized to meet the specific needs of NRIs, providing comprehensive coverage for themselves and their families.
• NRIs can avail of tax benefits under Section 80C of the Income Tax Act, 1961, on premiums paid for the term insurance policy.
• Term insurance plans offer flexible payment options, allowing NRIs to pay premiums through various channels, including online platforms, NRE/NRO accounts, and foreign currency remittances.

Term insurance for NRIs is a valuable tool to secure the financial future of their loved ones and build a diversified investment portfolio. It offers peace of mind and ensures that their family is protected, even when they are living abroad.

Benefits of term insurance for NRIs

Term insurance is a crucial financial tool that can offer peace of mind and financial safety for Non-Resident Indians (NRIs) and their families. Here are some key benefits of term insurance for NRIs:

Financial Security for Dependents:

NRIs can ensure their family's financial stability by compensating for income loss in case of their untimely demise. Term insurance provides a death benefit to the family, helping them meet their financial needs, maintain their standard of living, and achieve their future goals.

Debt Repayment:

Term insurance can help ensure that any outstanding loans or debts do not become a burden on the NRI's family in their absence. The insurance payout can be used to clear these financial obligations.

Affordable Premium Rates:

Term insurance plans for NRIs offered by Indian insurance companies provide high life cover at affordable premium rates. These plans can be up to 50-60% more budget-friendly than international term life insurance plans.

Customizable Coverage:

NRIs have the flexibility to choose the sum assured based on their family's financial needs. Term insurance plans offer a wide range of coverage options, from ₹50 lakhs to ₹5 crores or more, ensuring that the NRI's dependents receive adequate financial support.

Hassle-Free Payments:

NRI Term Insurance plans offer convenient payment methods. Premiums can be easily paid online using credit cards or net banking. NRIs can also make payments through their NRE (Non-Resident External) accounts, offering a seamless way to manage their policies from abroad.

Long Policy Tenure:

Term insurance plans for NRIs offer flexible policy terms, with coverage options ranging from 5 years to 99/100 years. This allows NRIs to secure their family's future for an extended period, providing peace of mind during their time abroad.

Additional Benefits and Riders:

NRIs can enhance their term insurance coverage by adding optional riders such as Accidental Death Benefit, Terminal Illness Benefit, Critical Illness Cover, and Waiver of Premiums on Disability. These riders provide extra financial protection in case of unforeseen events.

Tax Benefits:

Term insurance plans for NRIs offer tax advantages. NRIs can avail of tax benefits under sections 80C and 10(10D) of the Income Tax Act, 1961, on the premiums paid. Additionally, the insurance payout received by the nominee is typically exempt from tax, providing further financial relief to the family.

Easy Claim Settlement:

Term insurance plans purchased from India can offer easier claim settlement processes for dependents residing in India. This ensures that the NRI's family can access the financial support they need without unnecessary delays or complications.

Worldwide Coverage:

Term insurance plans for NRIs usually provide worldwide coverage, ensuring protection regardless of the policyholder's location. This gives NRIs the reassurance that their loved ones will be financially secure no matter where they are in the world.

How to procure term insurance for NRIs

Term insurance for NRIs (Non-Resident Indians) is an important way to secure your family members' future in your absence. Here is a step-by-step guide on how NRIs can procure term insurance:

Understand the Eligibility and Requirements:

NRIs interested in purchasing term insurance must meet certain eligibility criteria. Most insurance providers require NRIs to be Indian citizens with valid Indian passports living abroad temporarily. Some companies also offer coverage to Overseas Citizens of India (OCI) or Persons of Indian Origin (PIO). It is important to check the specific eligibility criteria of your chosen insurance provider.

Additionally, NRIs will need to provide certain documents, including a copy of their passport, proof of income, age proof, and medical records.

Choose the Right Insurance Provider and Plan:

Several insurance providers in India offer term insurance plans specifically designed for NRIs. It is important to compare the features, coverage, and benefits offered by different insurance companies before making a decision. Consider factors such as the policy term, sum assured, premium amount, and additional riders or benefits offered.

Decide on the Country of Purchase:

NRIs have two main options when it comes to purchasing term insurance:

• Purchasing in India: NRIs can choose to buy term insurance while they are visiting India. The process is usually straightforward and similar to the procedure for Indian citizens. However, NRIs need to disclose their country of residence, as some insurers have restrictions on the countries they cover.
• Purchasing from the Country of Residence: NRIs can also buy term insurance from their current country of residence. This process may be slightly more complicated and often involves purchasing the policy via Mail Order Business. It requires verification by a notary, Indian diplomat, or an official from the Indian embassy in the respective country.

Complete the Application Process:

Once you have decided on an insurance provider and the country of purchase, the next step is to complete the application process. This typically involves filling out an application form, providing the required documents, and undergoing any necessary medical examinations or checks.

Make the Premium Payments:

NRIs can usually pay the premiums for their term insurance plans using various methods, including online payments through net banking, credit cards, or funds from their NRE or NRO accounts. Some insurance companies may also allow direct payments from overseas accounts through the SWIFT network, but this may be subject to restrictions on accepted currencies.

By following these steps, NRIs can ensure they have the necessary term insurance coverage to provide financial security for their loved ones.

Documents required for NRIs to buy term insurance

• Attested copy of passport
• Application or proposal form
• Documents mentioning the health conditions/ health checkup reports
• An amount that is equal to the first calculated premium as well needs to be paid
• Foreign Account Tax Compliance Act (FACTA) form
• Last 6 months' bank statements and Last 3 Month salary slips
• Foreign Address Proof
• TIN / PAN number of resident country (if available), Form 60/ PAN declaration
• Income proof documents

Premium payment options for NRI term insurance

Term insurance for NRIs (Non-Resident Indians) is a crucial financial tool that can offer peace of mind and financial security for individuals and their families. When purchasing term insurance, NRIs have a range of premium payment options available to them, which are outlined below:

• Online Payments: NRIs can typically make premium payments online through net banking or by using their credit cards. This provides a convenient and flexible way to stay up to date with their payments.
• NRE and NRO Accounts: Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts are commonly used by NRIs to make premium payments. These accounts allow NRIs to manage their finances effectively while living abroad.
• Foreign Remittance: NRIs also have the option to use foreign remittance services to make their premium payments. This enables them to transfer funds from their foreign bank accounts to the insurance provider in India.
• FCNR Accounts: In addition to NRE and NRO accounts, NRIs can also utilise their Foreign Currency Non-Resident (FCNR) accounts for premium payments. This provides another convenient option for managing finances from abroad.
• Annual, Monthly, Quarterly, or Half-Yearly Payments: NRIs often have the flexibility to choose the frequency of their premium payments. Annual payments are generally the most convenient and beneficial option, but monthly, quarterly, and half-yearly payments may also be available depending on the insurance provider.
• Premium Payment Term and Frequency Customisation: NRIs can often customise the premium payment term and frequency according to their preferences and financial situation. This allows them to align their payments with their income and cash flow.
• Direct Payments from Overseas Accounts: Some Indian insurance companies allow NRIs to make premium payments directly from their overseas accounts through the SWIFT network. However, there may be restrictions on accepted currencies for international remittance.

NRIs should carefully review the premium payment options offered by different insurance providers when selecting a term insurance plan. It is important to choose a plan that offers convenience, flexibility, and ease of payment to ensure timely payments and maintain the validity of the policy.

Frequently asked questions