NRIs may need to purchase a term insurance policy in India under many circumstances. Most commonly, if you are living outside the country but your family lives in India, or if you have other dependents in the country, you may want to consider getting a term insurance policy in India itself. This way, you can safeguard your family’s future and finances, and give them a shield against any unfortunate events.
The Foreign Exchange Management Act has made it possible for Non-Resident Indians (NRIs) to get term insurance in India. Many insurance companies have created specially customized policy options suitable for NRIs. If you are a Non-Resident Indian and have a valid passport, you are eligible to purchase a term plan in India.
Things to Consider as an NRI While Buying Term Plans
1. Read the fine print for geographical coverage
Almost all insurance policies in India have a clause on geographical restrictions, which says that the policy will only cover expenses for treatment in India. For example, if an NRI living in Dubai has a policy in India, and undergoes a surgery there, the insurance will not cover the cost.
Although, a few insurers have started covering treatments outside India, these are for some specific illnesses only.
2. Underwriting restrictions for persons resident out of India
People who are resident outside India are thought of as riskier when compared to people who reside in India, since it is very difficult to confirm if the facts are genuine, in case you decide to claim the insurance amount. So, there are well-defined underwriting guidelines, and you have to abide by the rules and restrictions while getting a term life insurance as an NRI.
3. FEMA regulations
If you are an NRI, you need to also be careful about the rules, according to the Foreign Exchange Management Act (FEMA) concerning insurance policies. According to Regulation #3 of Foreign Exchange Management (Insurance) Rules, a person resident in India may purchase or continue to hold policy purchased from an insurer outside India when he was a resident outside India. However, on the issue of purchase of policies from insurers in India, the claim payout can be repatriated out of India to the extent of the premium paid in foreign currency.
4. Costs
If you live in a country with a lot of political instability (also known as High-Risk Countries), you will be a higher liability to the insurer, due to higher risk. So, you will have to pay a higher premium amount. If you live in a country known for lesser or no instability, your premium amount would generally be much less. For example, a person living in a country like Afghanistan or Cambodia will have to pay a much higher premium than a person who lives in Canada or Germany. This is because Afghanistan and such other countries are considered to have a much higher risk factor than a country like Canada.
5. Medical Examinations
You might need to visit India to give your medical examination, depending on the company which is the insurer. Generally, there are two ways to give the medical test. One way is to visit India and give the examination. Your insurer may pay for the travel expenses. The second way is to do the medical test abroad and provide a report to the insurance company you are applying for. Sometimes, if the insurance is created specifically for NRIs, insurance companies in India could tie-up with their counterparts abroad.
Best Term Insurance Plans for NRIs
| Plan | Policy Term | Sum Assured | Premium | Top Features |
ICICI Prudential iProtect Smart | Till 70 years
Max limit: 85 years | INR 1 crore | INR 1,335/month | 1.Terminal Illnesses are also covered with no extra premium. 2.At INR 350 extra, you get cover against 34 critical illnesses. 3.At INR 58 extra, you get an extra payout on accidental death. |
| HDFC C2PP Life Option | Till 70 years
Max limit: 80 years | INR1.5 crore | INR 1,654/month | 1.At INR 773 extra, you get extra payout in case of accidental death. 2.At only INR 28 extra, you also get cover against accidental disability. 3.At INR 321 extra, you get cover against 19 critical illnesses |
| Max Life Smart Term Plan | Till 70 years
Max limit: 80 years | INR 90 lakhs | INR 1,003/month | One year COVID-19 cover at INR 320 per lakh is available. Waiver of Premium rider is available at only INR 36 extra At only INR 62, you get extra payout in case of accidental death. At INR 241, you get cover against 59 critical illnesses. |
| Tata AIA Maha Raksha Supreme | Till 70 years
Max limit: 80 years | INR 1.2 crore | INR 1,163/month | At merely INR 9 extra, you get cover against accidental disability. At INR 249 extra, you get cover against 59 critical illnesses. |
pnb Metlife Mera Term Plan Plus | Till 70 years
Max limit: 99 years | INR 1.5 crore | INR 2,854/month | At INR 82, you get an extra payout on accidental death. At INR 16, you get cover against accidental disability. At INR 175, you get cover against critical illnesses. At INR 536, you get cover against serious illnesses. At INR 502, you get cover for your spouse. At INR 173, you get a waiver of premium. At INR 1,223, you get a waiver of premium and accelerated CI. At INR 42, you get cover for your child. |
Key Takeaways
NRIs can get term insurance in India as a protection for their family in case of unforeseen events. Especially if you live abroad and your family lives in India, purchasing a term insurance in India could be of much use for the family members. Also, when your family is located in India, they can look at new avenues and discuss opportunities with insurance companies here with much ease, and also claim benefits easily. You would also need to compare the different term insurance policies offered by Indian insurance companies before making your choice. The choice of your policy would depend on your income and risk profile, and the needs of your family or other dependents.
