Which Term Insurance Plan is Suitable for NRI?

Keeping your family members secured against any unfortunate event is everyone’s priority. When you have a steady source of income, you can create the right financial plan that will protect you and your family members. In addition to the citizens of India, NRIs are also eligible for the same. Securing a term cover for yourself is one of the primary financial planning steps for you as an NRI. 

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Buying a term insurance plan as a Non-resident Indian (NRI) is similar to buying a term plan as an Indian resident. However, there are a number of options to secure the cover.

This article will take you through the points that NRIs should consider while buying term insurance abroad:

What is Term Insurance?

Term life Insurance is a pure protection life insurance policy. It provides financial security and protection to your family members. In this, you can receive a large amount of sum assured i.e., life cover at comparatively low premium rates. The amount of benefit is paid to the nominee/beneficiary in case of the policyholder’s death during the policy tenure.

About Term Insurance Plans for NRIs

Term insurance plans for NRIs in India have flexible T&Cs and the sum assured amount varies from 2 Lakhs to 1 Crore. The premium rates are variable based upon the policy terms, the frequency of paying premiums, health condition, age, etc. To buy the term plan, the individual must be in the 18 years to 60 years age group. The premium payments can be done online using net banking.

An NRI can easily take a suitable term plan and there are 2 ways in which this can be performed. The individual can buy the policy while his/her visit to India. The entire process is simple and is done in the same way as it is for Indian residents. On the other hand, an NRI can also purchase the plan from the current residential place. This is performed via mail order business and needs detailed verification by the Indian embassy or notary.

Why Should An NRI Buy a Term Life Insurance Plan?

If an NRI is the main sole earner of the family, the feeling of being protected even in case of uncertainty can make one prepared for future goals. This is one of the main reasons Why NRI should consider a term insurance plan. Buying term insurance for NRI online is a hassle-free and convenient way.

Here are some of the important reasons Why an NRI should Buy a Term Life insurance plan:

  1. Financial security

    Every individual who has financial liabilities towards their loved ones should consider that they may not always be around. From house expenses to higher education of children, everything can be difficult if the breadwinner dies and one should take cautions to avoid a financial crunch in such cases.

  2. Cost-effective

    Term insurance plans can easily be purchased for a specific tenure at low premium rates and in case of an unforeseen event with the policyholder during the policy term, the nominee/beneficiary can either avail lump sum amount or sum assured as installments on a monthly basis or as a combination of both. It is advisable to buy a term insurance plan at an early age so that in case an NRI comes back to India in the future, they are secured already by a life cover.

  3. Tax Benefits

    Term insurance plans for NRIs give you tax savings benefit on the premiums paid u/s 80C. The maturity payout i.e., the sum assured received is also exempted from tax deductions, subject to T&Cs, u/s 10(10D) of the ITA, 1961.

  4. Timely Payouts

    In case of demise during the policy term, the nominee can receive their claims easily, provided the nominee has submitted all the required claim-related documents. As per the IRDAI’s insurance Act, 2015, It is compulsory for life insurers to pay all claims made 3 years after the commencement date of the policy.

  5. Liquidity

    It doesn’t matter what is your policy term or premium paying term is, after the 5 years of the lock-in period, you can partially or completely withdraw funds from your account when you need them the most.

  6. Policy Renewal

    Some term policies provide options for policy renewal at maturity. Under this, some medical tests are required related to health to meet the renewals standards.

  7. Grace Period

    In case someone misses out or fails to pay the premium amount on time, then a grace time of 15 days is required to pay the six months premium.

What are the Best Term Insurance Plans for NRIs in India?

Following is the list of best term insurance plans for NRIs in India. NRIs can choose the right term insurance plan from the list that fulfills all your insurance requirements.

Best Term Insurance Plans for NRIs Entry Age Maturity Age Sum Assured Claim Settlement Ratio (CSR)
Bajaj Allianz iSecure Plan 18 years – 65 years 85 years Min: 25 Lakhs Max: 50 Lakhs 98.48%
Kotak Preferred Term Plan 18 years – 65 years 75 years Min: 25 Lakhs Max: No Limit 98.50%
LIC Amulya Jeevan Term Insurance plan 18 years – 60 years 70 years Min: 25 Lakhs Max: No Limit 98.62%
ICICI Pru iProtect Plan 20 years – 65 years 75 years Min: Subjected to minimum premium Max: No Limit 97.90%

How to Choose the Right Term Insurance for NRI?

  1. Online presence

    Make sure that you can get adequate information about the term plan, insurance company, and service channels online, through the company’s official website. Using an online medium, you can directly contact the insurance provider from your residential country.

    Moreover, online availability should not be restricted to information. The company’s website should allow you to purchase and manage your plan online.

  2. Claim Settlement Ratio

    Insurance providers should have a good underwriting staff and information to process claims immediately. These days, companies majorly depend on technology for achieving efficiency in claim processing and underwriting. CSR (Claim Settlement Ratio) is a crucial parameter for life insurers as it shows:

    • The insurer’s quality

    • Claim settlement speed

    CSR indicates how many number of claims the company could settle in the last fiscal year out of every 100 claims received. Good CSR means that your family will get quick assistance in critical times. It is always advisable to consider CSR above 96 percent.

  3. Persistency Ratio

    Persistency Ratio is the ratio of life insurance plans which are receiving premiums on time in the year and the number of total active plans. This ratio represents how many policyholders are paying the due amount of premiums on a regular basis for the term plans. This value is estimated for certain months i.e., the next year of the policy. For instance, the persistency ratio of the 13th month is the representation of the premium amount receipt for the next policy year.

  4. Claim Settlement Procedure

    The claim settlement process is the main part of a life insurance policy. The good the claim settlement process of the insurance company, the more comfortable your loved ones will be in an unfortunate event. The foremost thing to note is whether the procedure has been explained on the company’s website. Because that is the first place where your family will check the detailed instructions. And you should also check if they can file a claim from a foreign country. Eventually, you have to make sure that your loved ones will not have to run here and there to get financial support.

  5. Premium Payment Options

    Insurance providers in India are expected to grow business only in the domestic currency. However, if the company allows it, you can directly remit to the bank account of the company. Various companies allow transactions in a number of foreign currencies. And, if you have paid premiums amounts in foreign currencies, the remittance is permitted in the foreign currency. For instance, if you have paid 50 percent of the premium amount in USD, your beneficiaries can return 50 percent of the claim amount to that currency.

Wrapping It Up!

A Non-Resident Indian (NRI) should buy a term life insurance plan to secure his/her family members' future goals in case of any unforeseen demise during the policy term. The premium amounts are variable i.e., depending on the T&Cs, benefits, and features of the policy. Also, it depends on the premium payment frequency, age, health condition, etc. The policy term varies on the basis of insurance products offered by different insurers in India. So carefully go through all the policy terms and buy the right term insurance plan.

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