Term Plans for NRIs

Today, Indians have spread to almost every corner of the earth and are making their mark in their professions. For most Indians who are settled or are working abroad, staying connected to their roots is important. It is also a wise financial sense to stay connected and make investments back home, especially at a time when the country is developing day by day. 

So, if you are pursuing your dream job in a foreign country or wish to come back in some years or if you have your family living in India, it is only prudent that you think about providing long-term security to your loved ones and help them fulfil their financial goals, even in your absence.

In India, term life insurance plans can be purchased by any individual who is of Indian origin, irrespective of his place of residence. He could be a residential citizen or an NRI. NRIs, Non-Resident Indians can also invest in term insurance policies. The FEMA, Foreign Exchange Management Act authorises NRIs to buy a plan that suits their requirements and helps them to provide a safety net to their loved ones.  

What are Term Insurance Plans for NRIs?

Term Insurance Plans for NRIs is very similar to any regular term insurance plan. It offers a life cover to the family in case of death of the insured member during the tenure of the policy. 

To understand better, let’s take an illustration, Vikram is a 40-year old software engineer working as a project manager in the USA. He has a 9-year-old daughter, and his wife Suman is a home-maker. His parents who live in Ranchi, do not have a source of income and therefore, depend on Vikram. Vikram, thus, has 4 lives dependent on him and it is imperative for him to be covered adequately. In such a scenario, a term plan would help him secure his family so that tomorrow if something happens to him, his family would be able to survive and address the following goals:

• Financial security of the family
• Provision for his daughter’s education
• An income for his parents

Why Should an NRI Buy a Term Plan in India?

When you have worked hard to create a name for yourself overseas, the need to protect your family back home also increases. The fear of an untoward incident always hovers over you, and you look for a solution to protect your family. A term plan not only provides financial security to your family in your absence but also gives you the confidence that even if something goes wrong, your family will not be pushed into a financial crisis. If you are an NRI and are contemplating investing in a term plan, the benefits listed below would help you in making a decision:

1. By paying a rather reasonable premium, you can get a high sum assured, making a term plan an affordable way to secure your family’s future
2. Under the Whole Life Cover option, you can get a life cover till the age of 99 years
3. When you buy the policy you can choose the way in which you want your family to receive the death benefit. It could be a lump sum, an annual or monthly payout, a combination of lump sum and regular payouts, an increasing income etc
4. There are also certain plans that offer add-ons, to further enhance the coverage
5. You can also avail of tax benefits on the premiums that you pay and the death benefit received by the nominee.

Term Insurance Plans for NRIs - Eligibility Criteria

The eligibility criteria such as entry age, the premium to be paid, policy tenure etc. are specific to the company and the policy opted for. However, there are some common parameters. Given below are the basic guidelines that are to be met by an individual to purchase a term insurance plan:

1. The entry age may range from 5 months to 30 years, while the policyholder’s age should be in the age group of 18 to 60 years
2. Some term insurance plans have a maximum entry age of 55 years
3. Payment of premium is mostly allowed online in specific banks
4. Depending on the country of residence, certain companies allow term plans. For example, Edelweiss Tokio offers term plans only for NRIs who reside in Dubai
5. There is a maximum sum assured of INR 1 to 5 crores
6. Most companies do not offer riders to NRI customers
7. An income proof is required when the sum assured is over INR 25 lakhs
8. There is no extra charge that you have to pay, because of being an NRI
9. The death benefit would be sent to the bank account mentioned while buying the policy

Term Insurance Plans for NRIs - Purchase Procedure

Most insurance companies offer flexible terms to NRIs so that buying term insurance is simple and hassle-free. To purchase a term insurance plan the procedure is quite similar for an NRI as it is for an Indian residing in the country. 

You first need to finalise the kind of plan that you want. If you are on a visit to India, you can purchase the policy from here. Else, if you are in your current place of residence, you purchase the plan via mail order. This would require detailed verification, which can be done by a notary and the Indian Embassy Officials. As explained earlier, the payment of premiums can be done online through net-banking. Keep in mind that for online premium payment you must be an account holder in any of the banks listed by the insurance company.

Given below are the documents that are required at the time of purchase:

• Attested Copy of Passport
• Duly filled and Signed Application Form
• Health Certificate from a Doctor
• Proof of Age
• Proof of Income
• Bank details
• NRI Questionnaire

Term Insurance Plans for NRIs - Benefits
 

1. Affordable Plans
   Most insurance companies offer Term Plans at very competitive prices. Compared to the premium that you pay, you get a much bigger amount as the death benefit. This money can be used by your family to lead a comfortable life.
    
2. Children’s Education
   If something happens to you, the money received from your life cover will help your children get the proper education. The dreams you had for their future can still be fulfilled. 
    
3. Regular Income
   Term Plans offer the option of how you want the family to receive the death benefit. You can either opt for a lump sum amount or opt for regular monthly payouts or a combination of a regular payout and a lump sum.
    
4. Safeguard the Future
   Term Plans give you a sense of security and confidence that tomorrow even if something happens to you, your loved ones would be independent, and not rely on others to fulfil their everyday needs.
    
5. Wealth Creation 
   With some term plans, you also have the option of investment. Such plans offer you a corpus at the end of the term if you survive the policy term.
    
6. Tax Benefits
   With a term plan, NRIs can save on the income that they earn in India. The premiums that are paid are exempted under Section 80C of the Income Tax Act, 1961. The death/maturity benefit that you receive would also fetch you tax benefits under Section 10(10D).

Procedure to Claim a Term Plan for an NRI

The claim process mostly depends on the country that the NRI resides in. However, most companies that offer term insurance to NRIs follow certain common procedures. Following the right method will help you in making the claim in an easy and quick way.

At the death of the insured member, the nominee of the insured member has to file for a claim. This should be done as soon as possible, preferably within the first few hours of death. This can be done by calling the company helpline numbers, sending them an email to notify them of the death, by registering the claim online through the company website or through a mobile app. The nominee would be required to provide all the necessary information about the death such as the cause, place, date etc. a few documents along with a duly filled and signed Claim Form would have to be submitted.  The list of documents that may be asked for is given below. You may be asked for some other paperwork or procedures depending on the cause of death and the terms and conditions of the opted plan.

• Claim Form
• Death Certificate issued by Authorised Personnel/ Board
• Policy Papers
• Certificate from last Medical Attendant, if the insured was admitted in a hospital before death
• Post Mortem Report
• Police Report in case of murder/ motor accidental death
• Photocopy of the Passport
• Valid Photo ID of the Nominee
• Bank Details for Death Benefit Payout

Importance of Nominee

When you purchase life insurance plan, you have to appoint a nominee, this person would receive the policy benefits in case of your death during the policy term. The nominee can be whoever you wish such as your spouse, children, parent, sibling, nephew, niece, uncle, aunt, or even a distant relative. It is advised that the nominee is a member of your immediate family so that disputes in the future about nominees and heirs can be avoided. 

It is quite important that the appointed nominee is a responsible person as he/ she would be responsible for claiming all of the policy benefits. It should be a person who would look after the whole family after your death.

Given below are some points that you should know:

1. As a policyholder, you can change the nominee as many times as you want
2. Depending on the plan that you have opted for, you may be able to appoint multiple nominees, the death benefit would then be shared
3. In the case of a minor nominee, the policyholder would have to provide an appointee
4. In case the nominee passes away before the insured, the company must be informed and another nominee must be appointed

Things to Keep in Mind While Buying an Indian Term Plan for an NRI

Very often, when an NRI looks for an insurance option in India, he often succumbs to publicity gimmicks by some sellers and ends up buying a plan that may not be best suited for him.  It, therefore, becomes imperative that you first prioritise your insurance goals and analyse your risk profile, only then would you be able to make an informed decision. 

1. Claim Settlement Ratio
   An insurance company declares its CSR on the basis of the number of life insurance claims that have been paid out in comparison to the claims that have been made. The higher this ratio, the more chances of making a successful claim occur. 
    
2. Availability of Add-ons
   Riders and Add-ons give you the option to include riders in your basic life insurance policy and enhance the coverage to a much greater extent. You may want to go for a policy that offers maximum add-ons, and the add-ons that suit you the most. Add-ons such as Critical Illness, Accidental Death and Disability Benefit Rider etc can help you in a time of crisis. 
    
3. Fits in Your Budget
   Though most term insurance plans are quite affordable, it can be a little difficult if you have other piled up expenses. It is, therefore, recommended that you select a sum assured whose premium you can easily and comfortably pay, regularly. 
    
4. Coverage
   Try and select a plan that offers a wider as well as longer cover. Depending on the maximum age of entry and the term of the policy, you will be covered.
    
5. Start Early
   One of the key elements to be kept in mind is that you start a term insurance plan as early in life as possible. If you haven’t yet invested in a term plan, do it now. With age the premiums you pay increase manifolds. It may become difficult for you to buy a plan if you are diagnosed with an illness or a lifestyle disease. Therefore, make an investment while you are young and healthy.

Conclusion

The one thing certain about life is that it is always going to be full of uncertainties. Death, disease and disability can strike anyone, anywhere irrespective of your age, caste or your place of residence. And though we may not be always able to avoid or avert such situations, we can always be prepared to deal with them, to the best of our capabilities. And when it comes to protecting yourself and your family, one of the best tools to do so is Term Insurance. 

Term insurance offers NRIs an opportunity to plan the future of their family. Insurance is an integral and crucial part of long-term financial planning. So, in order to take care of his family and the ones dependent on him, a term insurance plan is a great idea.