NRI Term Insurance Plan is designed to offer financial stability to your family, even when you're away.
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Term Insurance is a life insurance policy that compensates the family members in the case of the policyholder's demise within the policy period. Such a policy is quite helpful for the financial security of the family if the breadwinner of the family dies unexpectedly. NRIs (Non-Resident Indians) can also apply for such a policy. Read ahead to know more about an NRI Term Insurance plan.
Term insurance for NRIs also works like regular insurance. The policyholder must pay a fixed premium for assured coverage for the selected period. If the policyholder dies in this period, the nominee gets the sum assured amount. NRIs also have the option of Return of Premium (ROP). This option allows them to recover the total premium payments when the policy matures if the policyholder survives the policy period. They can also supplement the policy with add-ons for improved coverage.
NRIs can apply for Term Insurance in two ways, which are as follows.
When in India, it is relatively easy to purchase an insurance policy; you can do it online from your smartphone! You as an NRI should follow the regular procedure as an Indian citizen, but you must mention your country of residence to the insurer while providing your details. Choose an insurance company, select your preferred policy, submit the form with the required details/documents, and start paying the premiums mentioned. Please note that Term Insurance may not be valid for NRIs residing in specific countries, such as those that are politically unstable. Check the same with your insurance provider before purchasing the policy.
The process to obtain Term Insurance from a foreign country is slightly elaborate. You need to purchase the policy through Mail Order Business. A notary, an Indian diplomat, and/or an Indian Embassy official must verify your identity for application. If you are a student, your college head or supervisor can assist you with the verification.
Here are some interesting features of NRI Term Insurance.
Different people have different financial requirements, and Term Insurance in India allows NRIs to decide the policy cover based on this. Your cover may be as low as a few lakh rupees or increase to crores. It is entirely your decision, and some insurance companies do not pose any limits to the maximum amount insured.
Anyone between the age of 18 and 65 years can opt for Term Insurance (TI). Most insurance companies in India offer Term Insurance for NRIs. The term options of these policies can begin at six months and go up to 25 years. You can choose the term period that suits you best.
Applying for TI is relatively easy if all your documents are in place. NRIs should provide their passport copy, age and income proofs, and medical history records. Your insurer will determine the premium accordingly.
Premiums can be easily paid online through Internet banking. NRIs can use foreign remittance or NRO, NRE or FCNR accounts for the same. The frequency of paying the premium is also as per their choice. Generally, annual payments are the most convenient and beneficial.
The following factors should be considered before buying an NRI Term Insurance plan.
Policy tenure: NRIs must put a lot of thought on the policy duration while buying Term Insurance. It can be as low as six months and extend to 40 years. Experts advise having coverage for at least until you turn 65 years old. Usually, your age should fall between 18 to 55 or 65 years, depending on the insurance company's requirements.
Policy coverage: You also need to decide the policy amount for the insurance policy wisely. It is vital to make an informed decision because the amount you choose must be adequate for your family in case they lose you. Consider factors like debts, inflation, education expenses, and significant events like marriage or childbirth to choose the appropriate amount and type of policy. Choosing an escalated policy amount will secure your family against rising inflation. You can also go for a policy that automatically increases the sum insured by a specific rate every few years.
The eligibility requirements for Term Insurance as an NRI (Non-Resident Indian) can vary based on the insurance company and policy. However, here are some standard eligibility criteria.
Age: You must typically be between 18 and 65 to be eligible for TI as an NRI.
Residency: You must have a valid NRI status and reside in a country on the insurance company's approved list of countries.
Medical history: You must provide information about your medical history, including any pre-existing conditions and medications you take.
Occupation: Some insurance companies may restrict specific work profiles, such as those considered high-risk.
Premium payment: You will need to make premium payments in the currency specified by the insurance company, which may require you to have a bank account.
Documentation: You must provide certain documents, such as your passport, visa, and proof of residency, as well as any additional documentation required by the insurance company.
It's important to note that the eligibility requirements vary widely between insurance providers, so it's always a good idea to check with the specific provider to determine their needs for purchasing Term Insurance as an NRI.
NRIs need the following documents to apply for Term Insurance.
Completed insurance policy application form
Passport copy of the applicant (Both front and back)
Proof of residence
Copy of valid visa
Bank statements for the past six months
Medical records as needed
Foreign Account Tax Compliance Act (FACTA) form
Proof of age
Salary slips for the past three months
Photographs of the applicant
NRIS should buy Term Insurance in India rather than abroad for the following reasons.
Option of numerous insurers: India has many insurers enlisted with the IRDAI that provide various types of Term Insurance for NRIs. These offer high coverage at reasonable premiums.
Online medical checkups: Organising an online medical checkup for NRIs from their foreign residence is now possible. It makes it easy to buy Term Plans from India, their home country.
Special exit option: Under this feature, an NRI can exit from the policy anytime without losing any of the premiums paid. You are exempt from paying any additional fee and also get a reimbursement of all the premiums paid until then.
Concession on GST: NRIs can save up to 23% on their premium amount. You are eligible for a special 18% GST waiver if you buy Term Insurance from India. You should make the premium payment via your NRE account in Indian currency. Again, you are qualified for a 5% premium discount if you pay it annually.
Economical premiums: Compared to policies purchased abroad, those bought in India are more economical. The premium amount is much lower because it is paid in Indian rupees. Internationally, since it is paid in foreign currency, the premium turns out quite expensive.
As an NRI, can I buy a Term Insurance plan in India?
Yes, you can buy Term Insurance in India as an NRI. Ensure that the policy you choose covers your country of residence. You may need to get approval in writing from the insurer.
Can I buy multiple Term Insurance plans?
Yes, buying many Term Insurance plans for greater financial security of your family members is possible.
Can the frequency of premium payments be changed after purchasing the policy?
Usually, it is possible to change the frequency of paying premiums. But you may need to wait until the next premium is due to make the change. Also, each policy may differ in its regulations, so read the policy terms carefully.
What will be the outcome if I move abroad after buying the policy?
If you have already bought Term Insurance and then are moving abroad, you can inform your insurer and get the policy information changed accordingly. Your plan will remain active and continue as it is. Furthermore, remember to notify the country name where you will reside. If there are any contradictions, your insurer will let you know.
What happens to the policy if an NRI fails to pay the Term Insurance premium on time?
If you fail to pay the premium within the stipulated period, the insurer gives a grace period within which you can pay it. If you still do not pay it, the policy will lapse or be void. Generally, for a premium to be paid half-yearly or annually, you get a grace period of 15 days.
Who is not eligible for Term Insurance?
Usually, anyone below the age of 18 years or above 65 years cannot opt for Term Insurance. However, in some other cases, individuals may not be eligible for it. Please check with your insurance advisor for details regarding the same.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.