Paisawiki is a Part of Logo
700,120
*Please note that the quotes shown will be from our partners

Term Insurance for NRI in India

Life insurance plans are not only for the security and convenience of resident Indians but also for those Indians who stay abroad. Term Life insurance plans provide coverage for a fixed period at a fixed premium rate. Even NRIs can avail of the benefits of Term Insurance. In case of the untimely death of the policyholder during the policy term, their nominee will get the total payout assured. NRIs and People of Indian Origin or PIOs are eligible to buy term life insurance in India.

What is Term Insurance for NRI?

Term Insurance provides financial security to the insured person's family and the dependents for a fixed period. Due to any unforeseen event, the policyholder dies during this time the total sum assured can be secured by the nominee(s).

Although Term Insurance cannot replace the person's life for his family, it goes an extra mile to financially compensate the policyholder’s income for his family in times of crisis. The payout amount can be utilized to cover all major expenses like basic expenditure, education, and repayment of any loans. 

Even NRIs can purchase term Insurance policies like regular Indian citizens and secure their family’s future in their absence.

How to Apply for Term Insurance for NRI in India?

NRIs who are interested in purchasing Term Insurance plans in India can do so in 2 ways. They are as follows:

  • Purchase the Policy in India

    The NRI individual can directly purchase the Term insurance policy whenever he visits India. This process is the same as that for a regular Indian citizen. He can visit the insurance provider's office directly and purchase the plan.

  • Via Mail Order

    NRIs also choose to purchase Term insurance from the country where they currently reside. In this case, he needs to send a mail to the insurance provider in India. This process goes through a detailed verification performed by a notary and Indian embassy officials.

Documents Required to Apply for Term Insurance for NRI in India

An NRI purchasing policy needs to submit copies of the following documents with the insurance provider:

  • An attested copy of Passport.
  • Proposal or application form.

  • Medical certificates or documents specifying the health conditions.

  • Medical check-up reports.

  • Age proofs.

  • Proof of Income.

  • An amount, which equals the first calculated premium.  

Features of Term Insurance for NRI in India

The Term Insurance Plans for NRI in India have flexible terms and conditions. The distinct features of these plans are:

  • The eligible age for an NRI to purchase the plan is between 18 years and 60 years. Some policies may require maximum entry age at 55 years.
  • The sum assured by these Term plans varies from a minimum of Rs 2 Lakh to 1 Crore.

  • The term durations of these term plans range from 6 months to 25 years.

  • The premiums on different policies vary with terms of the policy, the frequency of premium payments, age, health conditions, etc.

  • There is no extra premium charged for a Term Insurance plan from an NRI.

  • NRIs can pay the insurance premiums online through net-banking. Here, the payment must be through Indian banks whose names are listed in the policy document and the NRI applicant should have either a current account or a foreign national or FA account in that bank.

  • If any NRI term plan holder defaults on any of the premium payments, they also benefit from a specified grace period in which they can pay the premium amount.

  • Some insurance companies require complete mandatory health-check-ups for the NRI policyholders at the time of their policy renewals.

  • NRIs need to be aware of the taxation laws to prevent deductions both in India and abroad.

Benefits of Term Insurance Plans in India

The various benefits associated with Term insurance plans for NRIs in India are as follows:

  • High Sum Assured up to Rs 2 Crore available.
  • Affordable premium at no extra costs.

  • Critical Illness Coverage.
  • Accidental Death Benefit Cover.

  • Multiple Payout Options for the death benefit.
  • Add-ons and Riders available.

  • Income Tax Benefits under Sec 80C and Sec 10(10D) of the Income Tax Act.
  • NRIs also have Return of Premium Option if not satisfied with the policy in the grace period or the free look-up period.

Comparison with Other Plans

Let’s have a look at the term insurance plans for NRI in India in comparison with other plans:

  • Term Insurance vs. Life Insurance

    Term insurance plans offers high coverage at low premiums only in case of the insured person's premature death.  However, life insurance plans not only cover the premature death of the policyholder but also pay a benefit if the policyholder survives the end of the policy tenure.

  • Term insurance vs. Health Insurance

    Term insurance plans offer financial cover to the policyholder only in case of untimely death. Health insurance plans offer coverage for any medical expenses because of critical illnesses, hospitalization, or any accidents.

Things to Consider while Buying the Plan

You must take the following things into consideration while buying the plan:

  • The NRI individual purchasing the term plan should not be a green card holder.

  • The NRI applicant for the term plan should not have applied for /planning to apply soon for citizenship in his current country of residence or any other country.

  • The minimum sum assured allowed would be Rs 2 Lakh. The maximum sum assured would depend on the insurability conditions listed by the insurance provider.

  • Even if the NRI moves to any other country as NRI, his existing term plans purchased in India will continue to be in Indian Currency.

FAQs

  • Q: What is the significance of a Term plan for an NRI?

    Ans: It provides a financial life cover for the NRI policyholder's family in his unfortunate absence due to untimely death. The plan's total payout can compensate for the family income, especially when the policyholder was the chief breadwinner of the family.
  • Q: Is there any specific age to buy a Term Plan?

    Ans: No, there is no specific age to buy term insurance. However, it is always recommended to start buying early in life as the premium rates increase with every passing year. Also, as age increases, getting a term plan is difficult as an individual suffers from various illnesses.
  • Q: Are the term plans tax-free for the NRIs?

    Ans: Yes, NRIs are eligible for tax deductions under Section 80D of the Indian Income Tax Act, 1961.
You May Also Want to Know About
Best Term Insurance Plans in India
Best Term Insurance Plans in India 2020 With the growing uncertainties of life, it is very import...
Types of Death Covered and Not Covered by Term Insurance
Types of Death Covered and Not Covered by Term Insurance With so many different kinds of term ins...
Life Insurance Benefits
Life Insurance Benefits What is life insurance? Life insurance is a financial contract between t...
Types of Life Insurance
Types of Life Insurance Life insurance is a legal contract between the policyholder and the insur...
Term Insurance Benefits
Term Insurance Benefits Term Insurance is a type of life insurance policy that ensures financial ...