What should NRIs know while buying term insurance abroad?
Term insurance has become an integral part of today’s life because it offers financial assistance to the family members of the insured policyholder in case of his/her sudden demise. Every sole bread-earner who wants to secure his/her family should purchase term insurance plans from eminent insurers. Apart from all Indian citizens, NRIs (non-residential Indians) can also purchase term insurance plans and offer the utmost security to their family members. Let’s know more details about NRI term insurance and how term insurance for NRI in India works.
Term insurance for NRIs
All NRI people can purchase the best term insurance for NRI in two ways.
- Through Mail Order Business, an NRI can buy term insurance while residing in his/her present country. A notary, an Indian diplomat, and an official of the Indian embassy of that country will verify the policy.
- It is better to purchase a term policy while visiting India. After the completion of the underwriting process, it will be considered as any other policy purchased by an Indian resident.
Top things an NRI should consider while buying a term policy
An NRI should consider certain things while purchasing a term policy as mentioned below:-
- The purchasing process is lengthy and time-consuming
- The Policy Term
- Healthcare check-ups and medical examinations
- Policy Premium
- The Sum Assured
- The Grace Period
- Claim Benefits
The purchasing process is lengthy and time-consuming
If an NRI wants to purchase the best term insurance for NRI in other countries, the procedure will be long-lasting. Where the policyholder resides plays a significant role in this procedure. Because the policyholder’s eligibility for purchasing the term policy and premiums depends on this factor, for countries where the political environment is not stable, the premiums would be higher as compared to countries with a stable environment. Many insurance companies also provide a list in which their services are not available. So, before purchasing a term insurance plan, an NRI should check with the insurance company.
The Policy Term
The policy term will be between six months to 25 years. The minimum age for purchasing an NRI term policy is 18 years, while the maximum age could be between 55-60 years (depending on the terms and conditions mentioned in the policy).
Healthcare check-ups and medical examinations
Many insurance companies also conduct telemedical examinations before granting a policy to an NRI. Some insurance companies also ask NRIs to submit relevant health documents. An individual needs to go through all the necessary medical examinations and must share those reports with the insurance company before opting for a term policy. The costs for these tests, if done outside India, will be borne by the individual.
If the term policy is issued in Indian currency, an NRI can pay the premium through a non-resident ordinary (NRO) account. But if he purchased the policy in foreign currency, he needs to pay the premiums through his NRE, FCNR account, SWIFT transfer, or an international credit card. Suppose the NRI policyholder’s families stay in India inherently. In that case, they can ensure that the premiums (post-purchase of the policy) will be paid through the insured’s bank account in India. So, it is mandatory to check which currency the policy is issued because the insurance company may have an issue with the currency of the resident country of the NRI.
Usually, premiums are the same for both residents and non-resident Indians. Premiums are calculated after evaluating the risk involved in insuring an individual. For an NRI, the insurance companies used to analyze parameters like health, job status, country-specific underwriting, and so on. Therefore, if an NRI resides in a higher-risk country, the premiums will automatically go on the higher side.
The Sum Assured
The sum assured for the best term insurance for NRI varies between Rs. 2 lakh to Rs. 1 Crore. If the policyholder dies in an unexpected incident, then the insurance company used to offer the sum assured to the beneficiary in his/her NRE account.
The Grace Period
If an NRI policyholder can’t pay the premiums on the date, they will also be given a grace period (like Indian citizens) within which they need to pay off their premiums. If they pay within this grace period, then their policy will not be abolished. The grace period is generally 15 days for term insurance plans.
Once an NRI purchases a term insurance policy, the Indian insurer will cover death benefits irrespective of the country of residence of the NRI. To initiate the death claim, the policy’s beneficiary needs to submit all necessary documents mentioned by the insurance company. The taxes and tax benefits on the policy are based on the tax laws of that residing country of the NRI.
List of documents required by the Indian insurance company from an NRI
- Age proof
- Income proof
- The proposal form
- All health-related documents
- Attested passport copy
- An application amount that is equivalent to the first premium
If you purchased a term policy through Mail Order Business
Under this scenario, the insurance company may ask for some additional documents from the NRIs. Some insurance companies also consider your lifestyle to calculate the sum assured and your premium amount. The sum assured depends on certain parameters including,
- The nature of the job
- Your resident country
- Your annual income
The awareness of term insurance and its significance are rising exponentially over the past few years throughout the globe. Many NRIs are also interested in purchasing NRI term insurance to offer financial stability to their family members. This allows the Indian insurance companies to expand their portfolios and drive mutual growth. As a result, many Indian insurers are embracing NRIs with various lucrative term insurance plans.
So, if you are an NRI and planning to purchase the best term insurance for NRI, then buy it immediately. But if you keep thinking, then you will grow older, and the stakes will also go on the higher side. So to offer a secure life to your loved ones investing in term insurance plans as soon as possible.