Why Should NRIs Buy Term Life Insurance In India?

Foreign Exchange Management Act has now made it possible for PIOs (Persons of Indian Origin), OCIs (Overseas Citizenship of India) cardholders, and NRIs (Non-Resident Indians) to purchase protection plans in India. If you are an NRI, i.e. Non-Resident Indian, you can buy term insurance plans which are specifically designed for individuals who reside outside India. These plans secure the future of your family and protect them in case of your absence. Term insurance for NRIs can be purchased online by conducting a medical examination via tele or video channels. Let’s understand the term insurance plans for NRIs in India. 

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Why Should an NRI Buy a Term Life Insurance in India? 

An NRI should buy term life insurance for expats to get pure risk cover for their family in the event of their unfortunate death. This is because NRIs can secure a large life cover at affordable premiums, which are up to 50-60% more affordable than international term life insurance plans. You can save further on your premiums by opting for the annual premium payment mode and availing GST waiver of 18%. Not only that, buying term insurance for NRIs in India is now much easier as you can clear your medicals by scheduling a session on video or tele channels and providing comprehensive cover against terminal illness and accidental death cover. These protection plans provide the death benefit on the death of the policyholder, which can help them pay off their loans, rent, and child’s education fees. 

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What are the Benefits of Buying Term Insurance for NRIs in India 2023?

Here is a list of ways in which buying NRI term insurance from India can benefit you:

  • Financial Support – Term insurance for NRI can help the individual get pure risk cover in the unfortunate event of his/her absence. It is a protection plan that provides the sum assured on the death of the nominee of the policy, which they can use to take care of their financial obligations like rent, child’s fees, and remaining loans and debts.

  • Cost-effective – NRIs can get protection for expats for a fixed tenure at level term life insurance rates. Protection plans in India are up to 50-60% more affordable than international term life insurance plans. These premium rates depend on a variety of factors, including your age and current country of residence. You can check out and compare term plans to find the term life insurance for NRI best suited for you.

  • Long Term Coverage – With a life term insurance policy, NRIs can get pure risk cover for a long policy tenure (till 99/100 years of age). During this term, in case of an eventuality covered under the plan, the insurer will payout the benefit amount to the nominee of the policy.

  • Tele/Video Medical – The loosened restriction in India allows NRIs to purchase their suitable term life insurance for expats by conducting tele or video medicals online. This way, the NRIs won’t have to visit India if they want to buy term plan from Indian insurers.

  • GST Waiver – The government of India provides a GST waiver of 18% on the premiums paid through NRE (Non-residential external) bank accounts in freely convertible currency.

  • Annual Discounts – You can also avail of a 5% additional discount on the NRI term insurance premium rates by opting to pay the premiums in an annual mode. This, along with the GST waiver, provides a total discount of 23% on the term insurance for expat premium rates.

  • Terminal Illness and Accidental Death Cover – These protection plans provide coverage against terminal illness and accidental death cover in exchange for nominal premiums payable along with the base premium. You can include these riders in the base plan as per the policy’s T&Cs.

  • Claim Settlement Ratio – In India, the IRDAI releases its CSR values each year, which can help the NRIs make an informed decision. You can easily check the CSR of different companies and buy term plans from an insurer with a high CSR ratio of over 95%. This ensures that the company is capable of settling your family’s potential claim in the future.

  • Claim Settlement Process – Buying a term insurance plan in India can also help your family’s claim settlement process, as the family will be able to visit the insurance company’s office much more easily in India instead of having to visit the company’s office in your current location.

  • Tax Benefits – All the premium amounts are tax-deductible for NRIs under Section 80C. The received death benefit amount is also exempted under section 10(10D), subjecting to the terms and conditions U/S 10(10D) of the Income Tax Act, 1961. 

  • Payout On-time – In case of the policyholder’s death during the policy term, the nominee/beneficiary can get their claims settled quickly and smoothly, provided the nominee completes all their claim formalities. As per IRDAI, every company must pay all the claims that were made 3 years after the commencement date of the policy. 

  • Flexibility – Term life insurance for NRIs provides policyholders with the flexibility to select the policy term, sum assured, premium payment terms, and premium rates as per the suitable needs of the individual. 

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How Can the Premiums of Insurance Plans be Paid? 

The premium amounts for NRI’s in India are payable through different modes: 

  • In foreign currency 

  • Non-resident bank account 

  • FCNR/NRE bank account 

It is very important to keep a check in the currency in which the policy is issued as the insurers issue them in the residential currency of the NRIs or Indian Rupees. If the policy that is issued is in the foreign currency, then they are required to pay a premium in that currency only from FCNR/NRE account in India. Whereas in case the policy is issued in Indian currency, premium amounts can be paid via NRO accounts. 

Documents Required to Buy an NRIs Term Plans 

Here is a list of documents required to buy term insurance for NRIs in India:

  • Employment ID proof

  • Valid visa copy

  • Last entry exit stamp

  • Last 6 month’s bank statement

  • Last 3 month’s salary slips

  • Foreign address proof

  • Photographs 

  • Passport copy front and back


How to Buy Term Life Insurance for NRIs in India Online?

You can buy term plan for NRIs in India online by following the below steps:

  • Step 1: Go to the Term Insurance for NRI page

  • Step 2: Enter your name, gender, DOB, contact number, and select the country of residence

  • Step 3: Fill in your smoking habits, occupation type, annual income, and educational qualifications

  • Step 4: Select the most suitable plan and proceed to pay

Wrapping It Up! 

An NRI should buy a term life insurance policy to secure his/her loved one’s future objectives in case of his/her demise during the policy tenure. The premium available on insurance plans is variable, i.e. depending on the terms and conditions, features, and benefits of the policy. It also depends on the frequency of premium payment terms, health conditions, age, etc. The duration of the plan also varies based on the insurance products offered by different insurance companies in India.

FAQ's

  • Q: Why should NRIs buy term life insurance?

    Ans: NRIs should buy term life insurance plans because of the following reasons:
    • Financial security of the family in the event of the policyholder's death

    • Long term coverage with a large life cover

    • Tele and video medical clearance

    • GST waiver and annual premium discounts

    • Tax saving benefits as per the prevailing tax laws

  • Q: What happens to term insurance if I become NRI?

    Ans: The term insurance continues as normal if you become an NRI during the policy term. However, you should always inform the insurer about your move and confirm if the policy will provide coverage in your new country of residence.
  • Q: Is Indian term insurance valid if you move abroad?

    Ans: Yes, Indian term insurance is valid even if you move abroad. Moving to a different country does not affect your existing term life insurance, and all you need to do is inform the insurer about your move to a different country and update the address details.
  • Q: Can NRIs get term life insurance in India?

    Ans: Yes, NRIs can get term insurance for NRI in India as long as they satisfy the specific plan's eligibility conditions. You can log in to the term insurance for NRI page and check out the list of available plans for your profile.
  • Q: Can NRIs take 2 term life insurance policy in India?

    Ans: Yes, NRIs can take 2 term insurance plans as per their human life value eligibility. You can easily buy term insurance plans as per your requirements to ensure the financial stability of your family in the event of your unfortunate demise.

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