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When should an NRI increase their Life Insurance sum assured?

As an NRI, it's essential to ensure your loved ones' financial security. Learn when to increase your life insurance sum assured.


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Life insurance is a critical component of financial planning, providing peace of mind to policyholders and their loved ones. As an NRI, you may have purchased a life insurance policy to safeguard your family's financial condition in case of your unexpected demise. However, as your circumstances change over time, your life insurance needs may also change. One crucial aspect to consider is whether your life insurance sum assured is sufficient to meet the needs of your dependents. In this article, we will consider situations where an NRI can consider increasing the sum assured. Take a look.

What is meant by sum assured in life insurance?
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The sum assured is the maximum amount an insurance company pays in case of an unforeseen event, like a health crisis or death. Sum assured in life insurance and refers to the fixed payment made upon death or maturity of the policy. It helps beneficiaries with ongoing financial obligations like mortgages and daily living expenses.

When choosing an appropriate sum assured, consider factors like income, spending patterns, and existing debts. Maintaining adequate coverage throughout changing circumstances, such as lifestyle and healthcare costs, is essential. NRIs can safeguard their family's well-being by re-evaluating their policies, taking advantage of tax benefits, and ensuring adequate coverage.

When to Increase sum assured in life insurance?
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NRIs should consider increasing their sum assured because of various reasons, such as changes in lifestyle and health conditions, increase in income and assets, approaching retirement age, rise in inflation and healthcare costs, growing family size, pre-existing health conditions or critical illnesses of self or a family member. Let’s explore these situations in detail.

1. Changes In Lifestyle And Health Conditions
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NRIs must regularly evaluate the impact of lifestyle changes and health conditions on their Life Insurance policies. This assessment is crucial as it affects the type and extent of coverage needed. Lifestyle changes such as moving to a different country or adopting new habits can directly impact their health and in turn their life insurance plan.

Another factor is ageing, it can cause unforeseen medical complications, causing more extensive care than initially planned. Pre-existing critical illnesses require enhanced coverage for financial protection against high healthcare costs outside India.

Milestones such as marriage or childbirth must also be considered when increasing sum assured to ensure ample support for dependents, even after retirement. Regular evaluation is crucial to make suitable modifications concerning premium payments and adequate risk cover provided through Life Insurance policies tailored to changing personal circumstances.

2. Increase in income and assets
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As NRIs continue to earn more income and accumulate assets over time, evaluating and adjusting their Life Insurance coverage is crucial. With increasing costs of living and healthcare expenses, having a higher sum assured can provide more comprehensive protection.

For example, if you've recently acquired new assets or properties, adjusting your coverage can ensure they're adequately protected in unforeseen circumstances. Similarly, if your income has significantly increased due to career advancements or investments, upgrading your policy can help mitigate potential risks.

It's important to note that even minor adjustments to the sum assured can significantly benefit financial protection against unexpected events. Regularly discussing updates with your insurance provider based on significant changes can help prevent being underinsured when you need financial help.

3. Approaching retirement age
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For NRIs approaching retirement age, it's essential to review their Life Insurance policies regularly to ensure adequate coverage. As people age, medical conditions may become more prevalent, increasing healthcare costs. Therefore, increasing the sum assured could be necessary to meet these expenses. Apart from this, NRIs may have different financial obligations and responsibilities, which may require additional coverage. One option could be investing in Pension Plans that provide regular income during retirement when there's no steady income.

It's also crucial to remember that if the premium amount for a life insurance policy was paid entirely from an NRO (Non-Resident Ordinary) account using Indian currency, the proceeds might not be transferable. Therefore, it's essential to consult with an insurance provider or agent about any changes in policy wording or tax benefits when nearing retirement age. This will ensure that NRIs are well-prepared for their retirement years with adequate coverage and financial security.

4. Rise in inflation and healthcare costs
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NRIs must consider inflation when increasing their sum assured for Life Insurance plans. Without adequate coverage, medical expenses can cause financial strain on families. Higher coverage can provide tax benefits and avoid out-of-pocket expenses during emergencies.

Insurance companies offer bonuses and discounts for regular policy renewals. Sufficient coverage also helps with critical illnesses and provides financial protection for dependents. A high sum assured life insurance policy can offer support during terminal illness or death.

5. Growing family size
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As NRIs' families grow, financial obligations also increase. This includes children's education, housing, food, clothing, and medical expenses. Insufficient coverage could cause significant financial strain. Regularly reviewing policies and adjusting the sum assured or opting for additional policies can secure your family's future.

6. Pre-existing health conditions
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NRIs with pre-existing medical conditions like diabetes, hypertension, or heart disease should increase their health insurance sum assured to avoid the high costs of medical treatment. A higher sum assured will provide comprehensive coverage, protecting individuals and their families from unexpected events. 

It's essential to disclose updated medical information to avoid claim rejections or delays. Opting for policies with shorter waiting periods or coverage for pre-existing illnesses from the outset is wise. Annual health check-ups can help manage current health status and maintain physical well-being while securing financial protection through appropriate coverage levels.

7. Critical illnesses or terminal illness of self or a family member
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NRIs should consider increasing their sum assured for health insurance due to critical illness or terminal illness of self or family members. This can help ease the financial burden of expensive treatments like chemotherapy and surgery, costing lakhs or even crores of rupees. 

Having a higher sum assured ensures that your financial obligations are met without draining your savings. A critical illness rider can also provide lump-sum benefits to pay off debts and cover ongoing medical expenses. It's never too early to get adequate coverage and ensure financial stability.

Steps to increase the sum assured for NRIs
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NRIs can increase their insurance coverage by contacting their provider or agent, updating their health information, paying additional premiums for increased coverage, and renewing policies annually. This ensures financial protection against healthcare costs and unforeseen emergencies.

Step 1: Contact your insurer
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NRIs should contact their insurance provider or agent to increase their sum assured for health or life insurance based on changes in their lifestyle, income, and health conditions. Share updated health and medical information to assess needs accurately, pay an additional premium and renew annually. Review policy wordings carefully to understand coverage. This ensures adequate financial protection, avoiding stress over paying medical bills from overseas and affecting financial obligations back home.

Step 2: Provide updated health and medical information
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To increase your Life Insurance sum assured , provide your insurer with updated health and medical information. Follow these tips.

Step 3: Pay Additional Premium For Increased Coverage
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NRIs can increase their Life Insurance coverage by paying an additional premium. This ensures higher sums and better protection, especially for unexpected medical expenses. Paying an extra premium can also accumulate a cumulative bonus, which gets added to the base sum assured at the time of renewal.

Step 4: Renew your policy upon expiry
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Policy renewal is essential for NRIs to ensure continuous financial protection. Here's why.

Frequently Asked Questions (FAQs)
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Here are the answers to the following questions regarding the Life Insurance sum assured for NRI's.


What is the recommended time to increase the sum assured for NRIs Life Insurance policies?

It is advisable to review your policy upon significant changes in your circumstances, such as marriage, childbirth, or any new diagnosis, which may affect your overall health status.

How does one determine the ideal sum assured?

The ideal sum assured amount depends on several factors, including age, medical history, lifestyle habits, and family’s medical history. Considering these factors when determining how much coverage you need before increasing it is essential.

Will I pay higher premiums if I increase my coverage?

Yes, increased coverage will lead to a corresponding rise in premium rates.

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.