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Term Insurance for NRI

NRIs in India can secure their family's financial future and enjoy peace of mind knowing their loved ones are protected, even when they are miles away.

  • 3,195 Views | Updated on: Mar 08, 2024

Term insurance for NRIs (Non-resident Indians) is a life insurance plan designed specifically for their needs and circumstances. It provides financial security and protection to their families in case of their untimely demise, no matter where they reside in the world.

Key Takeaways

  • NRIs can purchase life insurance in India under the Foreign Exchange Management Act, emphasizing the importance of term insurance for safeguarding themselves and their families.
  • Term Insurance for NRIs offers flexible coverage options ranging from ₹50 lakhs to ₹5 crore.
  • NRIs are offered tax benefits under Section 80C of the Income Tax Act for premiums paid.
  • They also have the option to receive the death benefit in Indian rupees for convenient access to funds.
  • Policyholders have the option to pay their term plan premiums via Internet banking, utilizing their foreign bank accounts, including Non-Resident External (NRE), Non-Resident Ordinary (NRO), and Foreign Currency Non-Resident (FCNR) Accounts.

In the last decade, the value of a term insurance policy has risen exponentially. With the realization of life’s unpredictability, investing in long-term planning, with the help of term plans, has become more vital than ever before. The brilliance of term plans is that they do not have any geographical limitations. No matter where you are on the planet, what nation you are in, or what city you reside in, the importance of life cover remains unaffected. The provision of term insurance for NRI is a perfect example of the fact that geographical limitations do not restrict you from enjoying the policy’s benefits.

What is Term Insurance for NRIs?

Non-resident Indians (NRIs) and Persons of Indian Origin (PIOs) can now purchase life insurance in India thanks to the Foreign Exchange Management Act. The importance of term insurance is to safeguard yourself and your family. All individuals of Indian heritage, regardless of their citizenship status in India, can buy such insurance. With so many options, you may conduct extensive research and get your hands on the best term insurance for NRI that meets your needs.

What are the Features of Term Insurance for NRIs?

The best term insurance plan for NRI in India has many features that can be beneficial for the policy buyers:

  • Pure risk cover: Unlike other life insurance plans that offer investment components, term insurance for NRIs focuses solely on providing a death benefit.
  • Flexible coverage: NRIs can choose a sum assured (death benefit) based on their individual needs and financial goals. Options typically range from ₹50 lakh to ₹5 crore.
  • Customizable terms: Policy terms can be chosen depending on the NRI’s current age and desired coverage period. Some plans offer terms from 6 months to 25 years.
  • Convenient premium payment: NRIs can opt for various premium payment frequencies, like annually, semi-annually, or quarterly, to suit their preferences.
  • Additional riders: Riders like accidental death benefits, critical illness cover, and waiver of premium can be added to enhance the plan’s protection.

What are the Benefits of Term Insurance for NRIs?

Term plans offer a number of advantages that can help the NRIs secure their future, even when they are not living in the same country they were born:

  • Financial security for the family: The death benefit provided by the term insurance plan safeguards the NRI’s family from financial hardships in their absence.
  • Peace of mind: Knowing their family is financially protected allows NRIs to live and work abroad with greater peace of mind.
  • Tax benefits: Premiums paid towards term insurance are eligible for tax deduction under Section 80C of the Income Tax Act, 1961.
  • Indian currency coverage: Many plans offer the option to receive the death benefit in Indian rupees, ensuring convenient access to funds for the family.

How to Buy Term Insurance for NRIs?

Being physically present in the country is not required to purchase NRI insurance in India. This requirement may vary from one insurance provider to the next. An NRI can easily get a good term insurance plan in many ways. The NRI policy buyer can purchase the coverage on a visit to India, for which the process is straightforward and follows the exact same steps as it would for any Indian citizen.

Alternatively, an NRI can acquire an insurance policy through their present country of residence. They can do this via mail order, but it necessitates thorough verification by Indian embassy officials and a notary.

The easiest approach to getting a life insurance policy for an NRI is to do it online. This allows you to evaluate all available alternatives to find the best term insurance for NRI and purchase it right from the comfort and privacy of your home or workplace in your current country of residency.

The only added advantage you get if you are present in India while buying the plan is that your insurer can undertake the necessary medical examinations required for a term insurance policy, considering it indicates the importance of life cover.

Premium Payment Method for NRI Insurance in India

As an NRI, you have several options for paying your insurance premiums in India. Here are the most common methods:

Using Indian Bank Accounts

  • Internet Banking: This is a convenient and widely used method. You can pay directly from your Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account through the online banking portal of your chosen bank. Ensure your bank offers this service for the specific insurance company.
  • Standing Instruction: Set up a standing instruction with your bank to automatically deduct the premium amount from your NRE or NRO account at the due date. This helps avoid missed payments and ensures timely coverage.
  • Cheque Payment: Send a cheque drawn from your NRE, NRO, or Foreign Currency Non-Resident (FCNR) account to the insurance company. Make sure the cheque is payable at par and includes all necessary details like policy number, name, and address.

Using International Payment Methods

  • Credit Card: Pay directly using your international credit card. This is a quick and easy option, but be aware of potential foreign transaction charges.
  • SWIFT Transfer: Initiate a SWIFT transfer from your foreign bank account to the insurance company’s designated account. This method takes longer but may avoid transaction fees.

Summing it Up

Term insurance plans are the most effective approach to control the risk of safeguarding your loved ones in the event of your death. Even if you are an NRI or a PIO, you must purchase term insurance for NRI as early as possible to ensure the financial stability of your family.

NRIs can use life insurance coverage in India to safeguard their loved ones in the case of an unanticipated incident. Your family will require financial assistance at various periods of life, and by obtaining a life insurance policy, you can protect your loved ones in the event of your death.

- 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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