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Can NRI Buy Term Insurance in India?

Term insurance for Non-Resident Indians (NRIs) provides a comprehensive financial safety net, offering high coverage at affordable premiums.

  • 8,643 Views | Updated on: May 13, 2024

Term insurance serves as a crucial financial tool, offering peace of mind and security to families in the face of unforeseen circumstances. But what if you are a Non-Resident Indian (NRI)? Are you still eligible to purchase term insurance in India? The answer is a resounding yes.

Key Takeaways

  • NRIs can conveniently purchase term insurance online or through authorized agents, regardless of their location.
  • They allow NRIs to select the duration of coverage and premium payment frequency that best suits their needs.
  • Premiums for NRI term plans can be paid in Indian Rupees (INR) through NRE/NRO accounts or foreign currency accounts.
  • NRIs are eligible for tax benefits on premiums paid for term insurance under Section 80C of the Income Tax Act.

Term insurance for NRIs not only offers high coverage at affordable premiums but also provides a hassle-free process to secure your family’s financial future. Non-Resident Indians (NRIs) can conveniently purchase term insurance online or through authorized agents, regardless of their location. The policy terms are flexible, allowing NRIs to select the duration of coverage and premium payment frequency that best suits their needs.

Overview of Term Insurance For NRI

Term insurance for Non-Resident Indians (NRIs) provides a comprehensive financial safety net, offering high coverage at affordable premiums. NRIs can conveniently purchase term insurance online or through authorized agents, regardless of their location. The policy terms are flexible, allowing NRIs to select the duration of coverage and premium payment frequency that best suits their needs. Premiums can typically be paid annually, semi-annually, quarterly, or monthly, through various online and offline modes.

NRIs must meet certain eligibility criteria, including providing documentation such as passport, visa, and address proof, and may need to undergo a medical examination. In the event of the policyholder’s demise during the policy term, the sum assured is paid to the nominee/beneficiary, ensuring the financial security of the policyholder’s family. It is essential for NRIs to review the terms and conditions to ensure the policy aligns with their financial goals and circumstances. Overall, term insurance for NRIs offers peace of mind, ensuring that the financial future of the policyholder’s family remains protected, regardless of the policyholder’s location.

Can NRIs buy a life policy in India?

Irrespective of their country of residence, any person of Indian origin is eligible to buy life insurance in India. NRIs can purchase term insurance, endowment plans, or unit-linked insurance plans (ULIPs) from various insurance providers. NRIs need to fulfill certain eligibility criteria, such as providing appropriate documentation, including their passport, visa, and address proof, and may need to undergo a medical examination. Premiums can typically be paid in Indian Rupees (INR) through NRE/NRO accounts or foreign currency accounts. The policy terms are generally flexible, with options for annual, semi-annual, quarterly, or monthly premium payments. Before purchasing, NRIs should review the terms and conditions to ensure the policy aligns with their needs and circumstances.

Eligibility Criteria to Avail of Term Insurance For NRI

Like any other individual, there are certain criteria that NRIs should fulfill before buying a term plan. The eligibility criteria to avail of NRI life insurance are:

General Criteria

  • Age: Typically, you must be between 18 and 60 or 65 years old to be eligible for NRI Term Insurance. The specific age limit may vary depending on the insurance company and the chosen plan.
  • Residency Status: You must hold a valid NRI status and reside in a country on the insurance company’s approved list.
  • Occupation: Some insurance companies may have restrictions on certain professions considered high-risk.

Documentation

  • Proof of Identity and Address: A copy of your passport (both pages with details and address) is usually required. Some companies may accept other valid documents like resident cards or national identity cards issued by your country of residence.
  • Age Proof: Documents like your passport or birth certificate can serve as age proof.
  • Income Proof: Salary slips, bank statements, or tax documents from your resident country might be required as income proof.
  • Medical History: You may need to disclose your medical history through a questionnaire or medical tests depending on the insurance company’s policy.

Additional Considerations

  • Medical Check-ups: While some companies might offer simplified underwriting processes, medical check-ups are often required for NRIs, especially for higher coverage amounts or older applicants. These check-ups can be done remotely or at designated facilities in your country of residence.
  • Premium Payment: Premiums can be easily paid online through internet banking or using NRO, NRE, or FCNR accounts.

How does the term insurance for NRI work?

Term insurance for NRIs works similarly to term insurance for residents of India, providing financial protection to the policyholder’s beneficiaries in case of the policyholder’s demise during the policy term. Here is how term insurance for NRIs works:

Policy Purchase

NRIs can purchase term insurance online or through authorized agents, regardless of their current location. They choose the policy term, sum assured, and premium payment frequency according to their financial needs and preferences.

Premium Payment

NRIs have the flexibility to pay premiums annually, semi-annually, quarterly, or monthly. Premiums can be paid through various online and offline modes, making the process convenient for NRIs living outside India.

Coverage and Benefits

In the event of the policyholder’s demise during the policy term, the sum assured is paid to the nominee/beneficiary. Term insurance provides financial security to the policyholder’s family, ensuring that they are financially protected and able to meet their financial needs and obligations.

Policy Terms and Conditions

NRIs can choose flexible policy terms according to their needs. The policy may include additional features such as a return of premium option, which refunds the premiums paid over the policy term if the policyholder survives the term.

Documentation

Acquiring term insurance for NRIs involves straightforward and hassle-free documentation. Most insurance companies offer an online application process, allowing NRIs to submit necessary documents electronically, including identity proof, address proof, and medical reports.

Claim Process

In the event of the policyholder’s demise, the nominee/beneficiary needs to file a claim with the insurance company. Upon verification, if the claim is valid, the sum assured is paid out to the nominee/beneficiary, providing financial security and stability.

Features of Term Insurance for NRIs

Term Insurance for NRIs offers several features making them a popular choice for non-residential Indians.

Flexible Policy Terms

Term insurance for NRIs offers flexible policy terms, allowing them to choose the duration of coverage based on their needs and preferences. NRIs can select policy terms that best suit their requirements, whether it is a short-term policy to cover a specific financial obligation or a long-term policy to provide extended protection.

Premium Payment Options

Term insurance for NRIs provides various premium payment options. NRIs can choose between annual, semi-annual, quarterly, or monthly premium payment modes, depending on their financial capability and convenience. This flexibility ensures that premium payments align with the policyholder’s cash flow and financial planning.

Easy Premium Payments

NRIs can make premium payments for their term insurance policies easily through various online and offline modes. Online payment options, such as net banking, credit/debit cards, and mobile wallets, provide convenience, especially for those residing outside India. Additionally, offline payment options are available through authorized agents or branches.

Set Limits Higher/Lower Limits According to Your Needs

Term insurance for NRIs allows setting the sum assured limits according to their financial needs. NRIs can choose the coverage amount based on their financial obligations, ensuring that their family is adequately protected in the event of an unforeseen circumstance. The flexibility to adjust coverage limits provides tailored protection, ensuring peace of mind.

Documentation at Ease

Acquiring term insurance for NRIs involves straightforward and hassle-free documentation. Most insurance companies offer online application processes, simplifying the documentation requirements. NRIs can submit necessary documents electronically, including identity proof, address proof, and medical reports, making the entire process convenient and efficient, even for those living abroad.

Benefits of Term Insurance For NRI

Before buying term insurance, you must understand the benefits they offer. This will help you make the right decision. Let us take a quick look at those advantages:

Affordable Premiums at High Coverage

Term insurance offers NRIs the advantage of high coverage at affordable premiums. Since term insurance is a pure protection plan, it does not include investment components, making it less expensive compared to other life insurance plans. This feature enables NRIs to secure their family’s financial future without straining their budget.

Online Medical Checkups

Term insurance often offers the convenience of online medical checkups, which is particularly beneficial for NRIs. Online medical checkups simplify the process, allowing NRIs to undergo the required medical tests from anywhere in the world without the need to visit a physical location. This feature streamlines the application process and reduces the hassle for NRIs.

Financial Security

Term insurance provides NRIs with a robust financial security blanket. In the event of the policyholder’s demise, the beneficiaries receive the sum assured, ensuring that their financial needs and obligations are met. This financial security ensures that the family’s financial future remains protected, including education expenses, outstanding loans, and daily living expenses.

Lifetime Coverage

Term insurance typically offers lifetime coverage, although this may vary based on the terms and conditions of the policy. NRIs can choose policies that cover them up to a certain age, ensuring that they are protected during their most financially vulnerable years. This ensures peace of mind for the policyholder and their family members.

Return on Premium

Certain term insurance plans offer a return on premium option. NRIs can opt for this feature, which refunds the premiums paid over the policy term if the policyholder survives the term. While this feature may increase the premium slightly, it provides NRIs with the benefit of getting the premiums back, ensuring they do not lose the money paid towards the premiums.

Tax Benefits

NRIs are eligible for tax benefits on the premiums paid for term insurance under Section 80C of the Income Tax Act. This feature reduces the taxable income, providing an additional incentive for NRIs to invest in term insurance. The premiums paid towards term insurance are deductible from the total taxable income, reducing the tax liability.

Life Stage Benefits

Term insurance policies often provide life stage benefits, allowing NRIs to adjust the coverage as per their life stage. NRIs can increase the coverage during significant life events like marriage, the birth of a child, or purchasing a house. This feature ensures that the policy remains aligned with the changing financial needs and obligations of the policyholder, providing comprehensive coverage at every stage of life.

Does it Require NRIs to be in India to Buy the Policy?

Indian insurance companies allow NRIs to buy life policies from them without being present in India. You just need to initiate a written communication with the insurer. If your insurer requires medical tests, you can do them in your country of residence and send the reports. You need to pay for the cost of the tests.

How to Pay the Premium?

When it comes to paying the premiums towards the life insurance policy for NRI, insurers in India offer a variety of channels. You can use the Foreign Currency Non-Resident (FCNR) or Non-Resident External (NRE) bank account, foreign currency remittance, and Non-Resident Ordinary (NRO) bank account. The NRO bank account can be used when you want to pay the premium in Indian Rupees. To pay it in foreign currency, the FCNR or NRE bank account can be used.

Rules Regarding Maturity and Death Benefits

Before you buy the whole life or term life insurance for NRI in India, you must learn the rules regarding maturity and death benefits. the rules regarding maturity and death benefits for Term Plans for NRIs (Non-Resident Indians):

Maturity Benefit

Term Plans are not designed for maturity benefits. Unlike endowment plans or whole life insurance, term plans typically don’t provide any payout if the policyholder survives the policy term.

There might be some rare exceptions. A few insurers may offer term plans with a “return of premium” option for NRIs. These plans function similarly to regular term plans but with an added feature. If the policyholder survives the term, they will receive all the paid premiums back, usually without any interest.

Death Benefit

The death benefit is the core purpose of a term plan. In case of the unfortunate demise of the NRI policyholder during the policy term, the death benefit will be paid to the nominated beneficiary. The death benefit received by the nominee is generally tax-free in India. This makes term plans an attractive option for NRIs to financially secure their families back home.

Factors to Consider Before You Buy Life Insurance from India as an NRI

Now that you know the answer to your question ‘‘Can NRI buy term insurance in India’’, it is time to opt for the most suitable insurance plan. Here are two aspects that you must keep in mind:

Cost

The cost of the policy is an important factor that you need to consider. The premiums are valued differently in separate countries. What you need to do is to compare the cost of a life insurance policy in India with the cost of it in the country of your residence. This will help you determine which option is best for you.

Tax regulations

The maturity and death benefits received from your life policy come with tax benefits in India. However, the rule is not the same in every country. Some countries require you to pay tax on maturity earnings. Find out the tax regulations in the country of your residence to make an informed decision.

Once you are aware of all the rules and regulations, you can look for the best whole-life or term insurance policy that is suitable as per your requirements.

Conclusion

Now that you know the answer to your question, “Can NRI buy term insurance in India?”, it is time to opt for the most suitable insurance plan. Term insurance for NRIs provides a comprehensive financial safety net, ensuring that loved ones are protected in case of unforeseen circumstances. Before purchasing, NRIs should review the terms and conditions to ensure the policy aligns with their financial goals and circumstances. It’s essential to understand all the rules and regulations, especially regarding tax implications, to make an informed decision. Once aware, NRIs can look for the best whole-life or term insurance policy that is suitable according to their requirements.

FAQs on Term Insurance For NRI


1

Does the NRI & OCI/PIO need to be present in India while buying the term insurance plan?

NRI & OCI/PIO can buy term insurance without being present in India, but it’s crucial to fulfill all documentation requirements.



2

Are there any tax benefits for NRIs & OCI/PIO with term insurance?

Yes, NRIs & OCI/PIO are eligible for tax benefits on term insurance premiums under Section 80C of the Income Tax Act.



3

Can I buy multiple-term plans?

Yes, you can buy multiple-term plans, but the total sum assured should align with your financial needs and insurance objectives.



4

What happens to the policy if an NRI fails to pay the Term Insurance premium on time?

If an NRI fails to pay the premium on time, the policy may lapse, and the coverage will cease. It is essential to adhere to payment schedules.



5

Does the country of residence impact the life insurance premium for NRIs?

Yes, the country of residence impacts the life insurance premium for NRIs, varying based on factors like health infrastructure, mortality rates, and other risk variables.



6

Can the frequency of premium payments be changed after purchasing the policy?

No, the frequency of premium payments cannot typically be changed after purchasing the policy, so choose the payment schedule carefully.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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