Term Insurance for NRIs is a way to secure your future financially. It is regular insurance allowed to cover a large sum assured. Both resident and non-resident are allowed to invest in Term Plans. Here is how- Term Insurance for NRI can be bought & used to ensure the future.
This article is part of a series on NRI Insurance. The details of the series are as below:
NRI Insurance – An Introduction (Click for Detailed Article)
NRI Life Insurance & FAQs (Click for Detailed Article)
Term Insurance for NRI (current article)
NRI Health Insurance & FAQs (Click for Detailed Article)
Term Insurance for NRIs or Term plans are products that pay a large death benefit if the policyholder dies within the policy period. If the policyholder outlives the policy period, he doesn’t get his premiums back. Although now in some variants (ROP- Return of Premiums) the premiums are refunded but that option is costly and not recommended.
An NRI can purchase any Term Insurance for NRIs from any company based in India
- He/she can purchase a plan whenever he visits India. This helps in completing the documentation or medicals required by the insurance company.
- He /she can purchase a plan from abroad also. In this case, he/she have to bear some charges like medical examination charges, If you are in India the charges are included in the policy itself.
Term Insurance for NRI – from an Indian company or a foreign Insurer?
One must buy policy form India in case he plans to return for good or is looking to spend his retirement in India.
Otherwise, there are benefits of buying a term plan abroad from foreign insurance companies. If you live in a developed country like Australia or the USA, the plan will be cheaper than India. Underwriting and data availability are more accurate & available in these places. Mortality tables get updated very frequently. For eg in the UK, it gets updated every year whereas in India it is at least 10 years. Life expectancy is also higher in developed countries. These reasons make the term plans cheaper.
If you are undecided – you must still take a term plan based on the most likely scenario of your return or staying permanently in the foreign country.
Features of Term Insurance for NRI
The period of insurance is 6 months to 40 years. The person insured must be 18 and the maximum age limit can vary between 55 to 85 according to different insurance companies.
What is Term Insurance? Details
The most common document that NRI requires is proof of age and income, proposal form, attested passport copy, and a cheque for the premium amount.
Medicals can be waived for NRI who is below 4o years or seeking cover less than 25 Lakhs. But it depends on the company rules.
The person must aware that not all companies are collecting premiums in foreign currency. So it is advised that before paying, one must research the company’s norms.
One can pay premium through his NRE/NRO account.
He/she can do payments through internet banking also. For that, they must have a bank account in any bank in India.
An NRI can purchase more than one term plan in India. If you are going for a large cover, It is advised to split cover between at least 2 insurers.
It is also advised to provide complete information on medical history, habits, country of residence. Do not hide or lie.
Some Important Questions
Q. I live in X country and took a term plan. Now shifted to Y country. Do I need to intimate?
A. NO. it is optional. If you intimate and update your contact details it is better.
Q. If I change my country of residence, will the insurance company change future premiums?
A. No. The premium once fixed will remain the same throughout the policy. The premiums for Term Insurance for NRIs are decided in a way that they carry this kind of risk.
Q. I am OCI and a foreign citizen or I am an NRI taking foreign citizenship soon. Should I face any problems?
A. Yes, insurance to a foreign citizen (even if he is a PIO or OCI) is not provided by most Indian Insurance companies. Please check this before proceeding.
Q. When should I buy Term Plan – While I am an Indian resident or NRI?
A. Life insurance especially works best when bought in the early stage of life. When you have bought a policy and continue paying it, it does not matter if your occupation, residence, or health changes.
Q. I bought a term plan in India. But I discontinued when I became NRI. Can I continue?
A. Contact the company with full details. If the company permits you can reinstate your policy by paying the lapsed premium. Sometime you may have to undergo medical tests to reinstate the policy.
Q. Is the claim procedure different from that of Residents?
A. The process is mostly the same but additional documents are required in case death occurs on foreign land. I also depend on conditions under which death occurred (accident or sickness) & where the last rites were performed. Refer to the checklist of most likely asked documents during the claim.
Hope this article on Term Insurance for NRI helps you to gain confidence by availing term plans and securing your family.
