Points to Consider Before Buying Term Insurance for NRIs

Factors NRIs Should Keep in Mind Before Buying Term Life Insurance

Here is a list of factors you should consider as an NRI before buying term insurance plans in India:

Term Plans

₹1
Crore

Life Cover

@ Starting from ₹ 16/day⁺

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₹50
LAKH

Life Cover

@ Starting from ₹ 8/day⁺

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₹75
LAKH

Life Cover

@ Starting from ₹ 12/day⁺

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1. Premium Rates

   NRIs can get term insurance plans in India at affordable premiums compared to international term plans. The premium rates are almost 50-60% more budget-friendly and allow you to purchase a term plan with a large life cover to secure your family’s financial needs in India.

2. Life Cover

   As an NRI you must always assess your and your family’s financial needs and obligations before deciding on the life cover appropriate for you. You need to make sure that the life cover is adequate for your family’s requirements in India since this amount will be paid to your family to maintain their current lifestyle in the event of your unfortunate absence.

3. Premium Payment Options

   The term plans in India offer several premium payment modes and frequencies for you to choose from. You can choose to pay the premiums in a regular, limited, or single term on a monthly, quarterly, semi-annual, or annual basis as per your suitability.

4. Medical Examination Process

   The restrictions on buying term insurance for NRI have loosened, which means that Indian expats can buy term plan from an Indian insurer by scheduling the medical exams without having to travel all the way back to India. These medical exams can be conducted via tele or video channels.

5. Compare Plans from Different Insurers

   The Indian regulatory body, IRDAI has enrolled several insurance providers which allows the NRI customers to compare term plans from different insurers before buying term plan. You can compare term plan on the basis of premium rates, sum assured, policy benefits, CSR values, and riders offered before purchasing the most suitable term plan.

6. Claim Settlement Ratio

   The IRDAI releases an annual report for every financial year stating the CSR value for each insurance company in India. The Claim Settlement Ratio is the ratio of the number of claims received by the company to the number of claims settled by the company in a financial year. You should always compare the CSR values of insurers as it represents the reliability of an insurer in the settlement of the customer’s claims. You should purchase a term plan from an insurer with a CSR of more than 95% as they have a better chance of settling your family’s claim in your absence.

7. Claim Settlement Process

   In the event of your unfortunate death, your family would have to go through the hassle of getting the claims settled while dealing with the grief of the unexpected loss. Therefore, it is important for you to buy term plan from a company with an easy claim settlement process. The claim settlement process will be much easier if the term plan was purchased from an Indian insurer as your family would not have to travel all the way to the country of your residence just to get their claims settled.

8. Policy Benefits

   As an NRI you must make sure that the term plan you purchase is suitable for your requirements. Make sure to go through the benefits offered under the plan like death or maturity benefits. You should also go through the list of available riders that you can include in the base term plan to increase its coverage. There are also special benefits like Special Exit Options available in term insurance for NRIs which allow the customers to exit the plan at a specific stage and get a return of all the premiums paid.

9. Applicable Tax Benefits

   NRIs can avail of several tax benefits under sections 80C and 10(10D) of the Income Tax Act of 1961. Not only that, but NRIs will also be eligible to receive a GST Waiver of 18% on the premiums paid via a non-residential bank account in freely convertible currency.

10. Make sure you are eligible to buy Term Insurance Plans

    Lastly, you need to make sure that you qualify to buy term insurance in India. You need to have all the required documents to buy term insurance as well as fit within the eligibility criteria for your most suitable term plan.

Final Thoughts

Term insurance for NRI is an important financial product for anyone looking to secure their family in their absence. Earlier, the NRIs had to be present in the country to purchase a term plan but now the restriction has been loosened. Today NRIs can buy term plans from Indian insurers in just a few clicks and secure their family's future.