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Term insurance for NRI provides financial protection to your family in case of your unfortunate demise. The NRI term insurance provides the policy’s payout in case of NRI’s demise, that can help their family maintain their lifestyle, handle daily expenses, and achieve their goals. As this policy ensures that your dependents will not face any financial hardship in your absence, you can enjoy peace of mind during your overseas stay.
Term insurance for NRIs is a specialized life insurance policy created for Indians residing abroad. As an NRI when you purchase this policy, you basically pay regular premiums from your overseas location to maintain coverage. In the case of your unfortunate passing during the policy term, your nominated beneficiaries will receive the full sum assured as a tax-free amount. They can use the amount to meet a range of expenses, such as for higher education, medical emergencies, debt repayment, and more.
Term Insurance for NRIs is same as any other term plans offered in India where the policy holder (in this case NRI) pays timely premiums to get insurance coverage which is paid to beneficiary of NRI in case of his death.
The policy requires basic documentation, including passport details, visa status, and proof of overseas residence. Most insurers now offer digital applications so that you can secure your family’s financial future from anywhere in the world.
NRI term insurance plans come with distinct features designed to cater to your unique requirements as an NRI. Following are some of the key features that make term plans a popular choice among Indian citizens living abroad:
Unlike other life insurance plans that offer investment components, term insurance for NRIs focuses solely on providing a death benefit. As a result, term plans are generally more affordable.
You can choose a sum assured (death benefit) based on your individual needs and financial goals. Options typically range from ₹50 lakh to ₹5 crore.
Policy terms can be chosen depending on your current age and desired coverage period. Some term insurance for NRIs offers tenure from 6 months to 25 years.
With term insurance for NRI, you can opt for various premium payment frequencies, like annually, semi-annually, or quarterly, to suit your preferences.
Term plan with return of premium rider and additional coverage related to accidental death benefits or critical illness can enhance the plan’s protection.
Whether you require short-term protection to cover a specific financial commitment or long-term security for your family’s future, term insurance for NRI offers customizable policy terms to suit your specific requirements.
For term insurance for NRI, you can submit required documents such as identity proof, address proof, income proof, and medical history through online platforms or directly to insurance agents, ensuring a seamless application experience.
Term insurance for NRI offers a number of advantages that can help you secure your family’s future, even when you are not living in the same country as them:
This is the primary goal of a term insurance policy. Term plans ensure that your family in India maintains financial stability even in your absence. They receive a guaranteed sum in the form of a death benefit that can cover various needs like:
While working abroad, you might often worry about your family’s well-being back home. The best term insurance plan for NRI can help you overcome such worries. As you get confident that your family will remain financially protected, you can focus on your career growth and not stress about unexpected life events.
Premiums paid towards term insurance are eligible for tax deduction under Section 80C, Section 80D, and Section 10 (10D) of the Income Tax Act 1961. These term insurance tax benefits reduce tax liability in the following ways:
These benefits apply even when paying premiums in foreign currency.
Many plans offer the option to receive the death benefit in Indian rupees. Thus, your family is protected from unpredictable exchange rate fluctuations that could affect the policy’s value. The claim settlement process also becomes significantly smoother as it is handled entirely within India’s banking system. Additionally, this arrangement eliminates the complexities and potential delays associated with international fund transfers during the payout process, ensuring quick access to funds when needed most.
While there may be various avenues for investment and insurance in your country of residence, you should also consider purchasing a term insurance plan from India. This is because investing in a term plan from India holds significant benefits:
As an Indian citizen who is temporarily living in a foreign country, you may be more familiar with the Indian financial system and trust the stability and reliability of Indian insurance providers. You may have existing relationships with Indian insurers or agents, making it easier to navigate the process of purchasing a term plan from India.
Term insurance plans offered by Indian insurers often provide comprehensive coverage at competitive premiums. In your absence, your loved ones can use the substantial coverage to meet all their financial needs, including medical bills, higher education fees, and daily expenses.
Purchasing a term plan from India allows you to leverage the currency advantage. Since premiums are paid in Indian rupees, you can benefit from favorable exchange rates and potentially lower premium costs compared to similar plans available in your country of residence.
Term insurance is eligible for tax deductions as per Section 80C of the Income Tax Act, 1961, subject to certain conditions. Additionally, the death benefit under the term plan is generally tax-free in India, ensuring that the sum assured remains intact for the beneficiaries.
Managing a term plan from India is often more convenient, especially if you have financial interests or family ties in the country. You can easily communicate with the insurer, make premium payments, and update policy details online or through designated channels.
For many NRIs, purchasing a term plan from India holds cultural and emotional significance. It can provide a tangible connection to your roots and a sense of security, knowing that you are contributing to your family’s financial well-being in your homeland. Additionally, leaving behind a legacy of financial stability for your loved ones in India holds immense value.
Considering all the above benefits, you might now wonder if NRIs can purchase term insurance plans in India. The answer is a resounding yes. The Foreign Exchange Management Act allows NRIs and Persons of Indian Origin (PIOs) to purchase life insurance in India, offering them a convenient and reliable way to safeguard their families’ financial future.
It is now clear that NRI insurance serves as a crucial financial tool to provide security and support to your loved ones in the event of your untimely demise. Let us now delve into how term insurance plans for NRIs work in India and the key aspects to consider.
Life insurance for NRI can be applied through various channels, including online platforms, insurance agents, or directly through insurance companies. The application process typically involves submitting relevant documents such as identity proof, address proof, income proof, and medical history.
Term insurance for NRI allows you to pay premiums for term insurance plans in foreign currency or Indian rupees, depending on your preference and convenience. Payments can be made through international wire transfers, NRE/NRO accounts, or online payment gateways. Insurance companies often offer convenient payment options tailored to the needs of NRIs, ensuring seamless premium transactions.
Term insurance for NRI provides coverage for a specified duration, typically ranging from 5 to 30 years, depending on the policy’s terms and conditions. In the event of your passing during the policy term, the death benefit is payable to the nominees, providing financial security to your family members in India.
In the unfortunate event of your demise, the nominees must initiate the claims process by submitting the necessary documents to the insurance company. The claims settlement process for term insurance for NRI may involve additional verification steps to validate your NRI status and overseas residency.
Having the necessary documents can streamline the application process and ensure a smooth purchase experience. Let’s explore the essential documents required to purchase term insurance plans in India:
You need to provide proof of your identity to establish your identity. Accepted documents typically include:
Proof of address is required to verify your residential address. Accepted documents may include:
You must provide proof of income so that the insurer can assess your financial eligibility for the term insurance plan. Accepted documents may include:
As an NRI, you must also provide proof of your overseas address. Accepted documents may include:
You need to provide recent passport-size photographs for identity verification and documentation purposes. Ensure that the photographs adhere to the specifications prescribed by the insurer.
Certain conditions must be met to qualify for term insurance policies as an NRI. Here’s a detailed overview of the eligibility guidelines for NRIs looking to purchase term insurance in India:
NRIs who hold Indian citizenship or individuals of Indian origin residing outside India are eligible to purchase term insurance in India. They must provide proof of their NRI status, such as a valid passport and visa documents, during the application process.
The minimum and maximum age requirements for purchasing term insurance may vary among insurance providers. Generally, individuals between the ages of 18 and 65 are eligible to apply for term insurance in India. However, some insurers may have specific age limits for NRIs, so it’s essential to verify age eligibility with the chosen insurance company.
NRIs must have a stable and verifiable source of income to qualify for term insurance in India. Income can be derived from employment, business ownership, investments, or any other legitimate sources. Proof of income, such as salary slips, bank statements, or income tax returns, may be required during the application process.
Like resident Indians, NRIs are required to disclose their medical history and undergo medical underwriting to assess their health status. Insurance companies may require NRIs to undergo medical tests, including blood tests, urine analysis, and ECG, to evaluate their health condition accurately. Individuals with pre-existing medical conditions may still be eligible for term insurance but may face higher premiums or coverage limitations.
If you are an NRI looking to purchase term insurance in India in 2024, here is a step-by-step guide to help you navigate the process smoothly.
Before purchasing term insurance, assess your coverage needs based on factors such as your family’s financial obligations and future goals. Determine the coverage amount and policy term that best aligns with your family’s requirements and financial situation. For instance, if you want extensive coverage, you can opt for a ₹1 crore term insurance. Similarly, whole life insurance will be the right alternative if you are looking for lifetime protection.
Research various insurance providers offering term insurance plans for NRIs in India. Consider factors such as the insurer’s reputation, claim settlement ratio, policy features, and premium rates.
Compare the features and benefits of different term insurance plans offered by various insurers. Pay attention to factors such as coverage amount, policy term, premium payment options, and exclusions. Choose a policy that meets your specific needs and offers comprehensive coverage for your family.
Gather the necessary documents required to purchase term insurance as an NRI. This may include proof of identity (passport), address proof (utility bills or rental agreement), income proof (bank statements or salary slips), medical reports, and proof of NRI status (overseas address proof or visa documents).
Once you have selected a term insurance plan and gathered the required documents, proceed to apply for the policy. You can apply online through the insurer’s website or contact an insurance agent for assistance. Fill out the application form accurately and provide all necessary information and documentation.
As part of the application process, you may be required to undergo a medical examination to assess your health status. The insurer will arrange for a medical check-up at a designated healthcare facility or arrange for a telemedical consultation, depending on the insurer’s requirements and your location.
Upon approval of your application and completion of the medical examination, proceed to pay the premium for the term insurance policy. You can make premium payments through international wire transfers, NRE/NRO accounts, online payment gateways, or other convenient channels accepted by the insurer.
Once the premium is paid and the policy is issued, carefully review the policy documents to ensure all details are accurate and meet your expectations. Pay attention to coverage amount, policy terms and conditions, premium payment frequency, riders, exclusions, and other relevant information.
Keep the term insurance policy documents in a safe and accessible place. Make sure your family members are aware of the policy details and know how to access the documents in case they are needed. Consider storing digital copies of the documents for easy access from anywhere in the world.
Regularly review your term insurance policy to ensure it continues to meet your evolving needs and circumstances. Stay informed about any changes in insurance regulations or tax laws that may affect your policy.
Claiming term insurance for NRIs remains a straightforward process in 2024. The nominee must first inform the insurance company about the policyholder’s death and submit the death certificate. Required documents include the original policy papers, nominee’s ID proof, bank details, and relationship proof with the deceased. Many insurers now offer digital claim submission through their websites or apps.
Once verified, the claim amount is directly transferred to the nominee’s Indian bank account. For international deaths, additional documents like death certificate attestation from Indian Embassy may be required.
Term insurance for NRI in India offers a range of benefits designed to provide comprehensive coverage and peace of mind to you and your family. With customizable coverage options, tax benefits, expertise in the Indian market, and adherence to Indian laws, term insurance for NRI ensures that you can provide your family with valuable financial protection and peace of mind, even from afar.
1
No, NRIs do not need to be physically present in India to buy a term insurance plan. They can apply for the policy online or through authorized agents from anywhere in the world.
2
If term insurance for NRI premiums is not paid on time, the policy could lapse, resulting in the loss of coverage. Many term insurance policies for NRIs provide a grace period, allowing for late payments to maintain the policy’s active status. However, if the premium is not paid by the end of this grace period, the policy may be terminated.
3
The best company to buy term insurance for NRIs in India depends on individual needs, preferences, and financial goals. They should research and compare offerings from multiple insurers before making a decision.
4
NRIs can pay term insurance premiums through various channels, including international wire transfers, NRE/NRO accounts, online payment gateways, or through authorized agents. Insurers typically accept payments in foreign currency or Indian rupees, providing flexibility to NRIs.
5
Yes, NRIs can buy multiple-term insurance plans in India from different insurers to enhance their coverage and meet specific financial goals. However, insurers may have limitations on the total coverage amount based on the applicant’s financial profile.
6
Factors to consider before purchasing term insurance for NRIs in India include coverage amount, policy term, premium affordability, insurer’s reputation, claim settlement ratio, policy features, tax implications, and suitability of additional riders.
7
Term insurance for NRIs in India is subject to Goods and Services Tax (GST) at applicable rates. The GST rate may vary depending on the premium amount and insurer. NRIs should factor in GST when considering the overall cost of the term insurance plan.
8
Yes, NRIs can continue their term insurance policies in India even if they move abroad. They need to ensure timely premium payments to keep the policy active and maintain coverage for their beneficiaries.
9
NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts are types of bank accounts that NRIs can open in India. NRE accounts are for repatriable income, while NRO accounts are for non-repatriable income.
10
Premiums of term insurance for NRIs are eligible for tax benefits under Section 80C of the Income Tax Act. Additionally, the death benefit received by the nominees is typically tax-free under Section 10(10D) of the Income Tax Act.
11
Yes, term insurance for NRIs. They can purchase term insurance plans in India to provide financial protection to their families back home.
12
Maturity benefits from term insurance for NRIs are typically tax-free under Indian tax laws, provided certain conditions are met.
13
Yes, some plans offering term insurance for NRI require them to undergo a medical examination as part of the application process. It depends on factors such as age, sum assured, and medical history.
14
Yes, NRIs can buy term plans in India. They can apply for the policy online or through authorized agents from anywhere in the world without the need to be physically present in India.
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.
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
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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