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One of the most effective methods of protecting your family in case of your absence is term insurance. It is the traditional investment favorite in India and majorly Indians are likely to hold at least one, if not more term insurance policy. In addition to Indian Citizens, NRIs are also eligible for this protection. Thus, it is quite natural that Non-Resident Indians (NRI) may consider investing in a term insurance policy to secure the future of their loved ones.
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Term Insurance is a type of life insurance product where the insurance company provides coverage for a specific ‘term’ in return for a certain premium paid over a time period. If the policyholder dies during the term of the policy stated in the policy, a death benefit is paid to the assured’s family. It safeguards your capital reserves and guarantees a burden-free future. Every individual is eligible for this security and Non-Resident Indians (NRIs) are not excluded from this. Let’s understand term insurance for NRI with the help of an example:
Suneet is an unmarried NRI of 35 years living in Canada for 5 years. He was healthy but lost his life in a dangerous accident in Canada. His parents lived in India and he was their only son. Suneet’s younger sister was studying at the time of his demise. The demise of their son has put the life of Suneet’s parents into emotional difficulty. However, they were secured from financial stress because of term life insurance. Mahesh had purchased a term cover of Rs. 1 Crore when he was 25 years old for 25 years of the policy term. As, term insurance policies are also valid outside India, so his parents got a sum assured of Rs. 1 Crore that will easily cover their daughter’s future goals.
Note: Now that you know that what is Term Insurance For NRI, you should also get to know about what is term insurance to buy a term plan for your loved ones.
Term Plans
The Answer is Yes. PIOs (Persons of Indian Origin) and NRIs (Non-Resident Indians) are eligible to invest in term Insurance policies offered by Indian insurance companies. Before discussing the pre-requisite of having term insurance for NRIs, let’s understand who are Non-resident Indians (NRIs). NRIs are Indian Citizens or foreign nationals having Indian origin who can trace their birth, lineage, or origin to the Republic of India. The population of NRI includes parents, spouses, and children of those persons who have moved outside India to search for employment.
Another question that may come to the mind of an insurance buyer is whether the Indian citizen's death outside India is covered by term insurance. Yes, in the case of a short trip, a natural death is usually covered regardless of where it occurs. However, in cases, if you purchase a term plan as an Indian citizen but are needed to move abroad because of employment or other reasons during the term of the policy. You may be considered an NRI after buying a term plan as an Indian Citizen. In such scenarios, you should inform your respective insurance company about settling abroad. A lot of things depend on the place you migrated to and the risks related to it. Your plan may remain unchanged or might be modified.
Here are some of the points mentioned about term insurance for Indians migrating to another country:
The policyholder should be an Indian Citizen
They must not have applied or planned to apply for citizenship in a foreign country in future
NRI can buy term policy in two ways:
By purchasing a term plan in person when he/she is in India
By purchasing a term plan when residing in a foreign country via mail
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NRIs during their visit to India can contact an insurer directly or through an advisor and apply for investing in the term insurance plan of their preference. While reviewing the case, the company asks for medical history and also collects some basic information like country of residence. Then, a policyholder is required to pay premium rates as per the policy terms.
You can also buy a policy from an insurance company located in your home country (India) while sitting in your country of residence. This is mainly useful when you have your family back in your homeland, so it becomes easier for your nominees to file a claim in the unforeseen event of your death.
Policy Term: The tenure of term insurance for NRIs generally ranges between 6 months and 25 years. The minimum entry age is 18 years and the maximum entry age varies between 55 and 60 years, depending upon the age and health of an NRI at the time of purchase.
Sum Assured: The sum assured amount ranges between Rs. 2 Lacs and Rs. 1 Crore. The death benefit or the amount of sum assured is paid to the nominee/beneficiary in his/her Non-Resident External (NRE) account. It may be subjected to the type of NRI’s job, policyholder’s job, and residential country.
Premium Rates: There is no fixed amount of premium and the premium payment depends on different parameters such as sum assured, policy term, riders chosen (if any), and payment frequency. The premium amount can be paid online through foreign currency or the life assured’s NRE/NRO bank account. The premium amount paid remains the same for resident and non-resident Indians for a given SA.
Documentation: An NRI shall be required to submit the below documents to the insurance company to commence the policy enrolment process:
Proposal Form
Age
Income Proof
Medical Report
Attested copy of passport
Application fee equal to the premium payable
Additional Documents such as a Personal financial questionnaire, a certificate from a chartered accountant, a copy of the enrolment contract, etc.
Policy Renewal: Few term insurance policies offer an option of policy renewal to the NRI policyholders during maturity. In order to do this, he/she shall be required to undertake some medical examinations to meet the renewal criteria. Moreover, NRIs should always ensure that they do not default on the premium amount or delay the payments of a premium during the term of the policy, in order to maintain a good record.
Claim Initiation: In case of the unfortunate demise of the NRI policyholder having term insurance abroad, below are some of the additional documents that are required to be submitted to the insurance company to start the claim process other than basic information such as original documents of the policy, claim intimation form, address copy and ID proof:
Certificate of Employer along with contact and leave information
Embalming certificate issues by the embalming establishment, if in case the body has been mummified to preserve it on death
Death certificate copy verified by the Indian Embassy situated in the country of demise
Translation of all the above documents, if their original documents are not in the English language.
Purchasing term insurance for NRIs is a smart way to create a financial safety net for you and your loved ones, especially when you are far from your home. However, it is also important to note that not all NRIs are eligible to avail of the term insurance policies since many Indian companies follow a list of countries to which they refrain from providing services. Therefore, it is important to understand if your residence is categorized as high risk.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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