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Term Insurance For NRI

Term insurance of NRI (Non-Resident Indian) provides financial protection to the NRI's family in case the NRI passes away. ...Read More

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You may not always be around to take care of your family. And that’s when a term plan ensures your family is well protected.

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TERM INSURANCE PLANS BUYING GUIDE

Term Insurance Plan for NRI

Term Insurance Plan for NRI
April 14, 2024

Table of Content

 

What is Term Insurance for NRI Plans?

Regardless of which foreign country you currently reside in, whether it's the US,UK or Canada, term insurance plans for NRIs can indeed be crucial to secure your family’s future, at least financially.The term plan for NRI protects your family's financial future in the unfortunate event of your untimely death. Through the insurance cover amount, your family can pay off any liabilities like home loans, car loans, or credit card dues, continue to cover their daily costs and maintain their standard of living.

Simply put, term insurance plans for NRI work the same way as other term plans in India. To get the assured cover amount, the policyholder pays the premium timely whenever required. The nominee, who can be your family member or other loved ones, receives the sum assured in the unfortunate event of the policyholder passing away during the tenure of the term insurance for NRI in India.

Features of NRI term insurance

  • Easily pay without any trouble

    • If you purchase the best term insurance plan for NRI online, paying the premiums can be simple. To make payments, NRIs can use a foreign bank account or the internet banking feature of your NRO, NRE, or FCNR accounts. The features of term insurance include flexible payment options and affordable premiums.

  • Choosing the amount of life insurance coverage you want

    • NRIs can conveniently choose a term life insurance plan whose cover amount suits their family’s needs.  Depending on your existing assets, liabilities and expenses, NRIs can choose the coverage amount for term insurance for parents that is likely to be enough for their family's financial future.

  • Adjust the policy term according to your needs

    • Big insurance companies in India, like HDFC Life, provide flexibility in term insurance for NRIs in India to adjust the policy term. NRIs can select from a variety of flexible policy tenures with term insurance plans, such as 10 years, 20 years, 40 years,and so on. NRIs can nowadays even select the best term insurance plan for NRI that offers coverage till the age of 100.

  • Simplified Documentation

    • Purchasing term insurance for NRI requires a few documents. In addition to the physical examination, this list usually consists of the application form, a copy of your passport, proof of age, and proof of income. Some of these documents are primarily meant to assist your insurer in calculating your premium.

  • Tax Benefits

    • When it comes to paying premiums, deductions under 80C and for other optional riders (depending on the riders chosen), NRIs are eligible for tax benefits. Section 10(10D) of the Income Tax Act, 1961, specifies the conditions under which the insurance payout is exempt.

What are the benefits of term insurance for NRIs?

1. Advantages from taxes

For the term insurance premium paid under Section 80C and the premium paid for other optional riders (depending on the riders chosen), NRIs are eligible for income tax benefits. Income Tax Act of 1961's Section 10(10D) specifies the conditions under which the payout for the term plan for NRI is exempt from taxes.

2. Death benefits

Term insurance policies provide a sum assured in the event that the policyholder experiences an unfavourable event. According to the guidelines outlined in Section 10(10D) of the Income Tax Act of 1961, this is given to the nominee and is tax-free.

3. Staying financially secure

For NRIs, term insurance can be a very reliable source of financial protection for their family’s future. NRI term plans can be a cost-effective way to cover your loved ones' future expenses through the assured cover amount, thus letting NRIs live with mental peace. In case being an NRI you have multiple financial dependents in India as well as aboard then you can opt for 2 crore term insurance for a comprehensive financial protection.

4. Choose how you want to get paid

Several payout options are available for term insurance for NRI in India, including lump sum, regular income, lump sum plus regular income, & increasing cover over time. Depending on your family's preferences and lifestyle requirements, you can choose anyone.

Why should NRIs purchase a term plan from India?

Buying term insurance for NRIs has not one but many benefits, including income tax benefits, simpler claim processing for dependents living in India, assurance of family’s financial security through the cover amount, affordable insurance premiums, and last but not least, the luxury of living with mental peace, knowing that the family’s future is not in jeopardy in case of your untimely demise. It's also essential to consider how much term insurance do I need to ensure adequate protection for my loved ones.

How Do Term Insurance Plans For NRI Work in India?

For NRIs, term insurance plans in India work in the same way as regular term plans. There is no big difference that can become a cause of worry for NRIs. When the policyholder keeps paying the NRI term insurance premium in a timely and full manner, the assured sum is given to the nominee if the policyholder dies during the tenure of the Life Insurance for NRI Policy. Also, if the policyholder survives the tenure of the insurance policy, NRIs may choose the return of premium (ROP) option, in which the entire amount of premium payment is returned to the NRI policyholder at maturity. Furthermore, NRIs can expand the coverage of their plan by adding more optional riders or add-ons.

Can NRIs Buy Term Plans in India?

Yes, they surely can. If they meet the relevant term insurance eligibility criteria set by a life insurance company, non-resident Indians (NRIs) can indeed be eligible to buy term insurance in India to secure their family’s financial future with the assured cover.

What Are the Documents Required for Term Insurance Plans for NRI in India?

In order to ensure a seamless policy purchase process, it is imperative that the documentation for term insurance for non-resident individuals (NRIs) be presented in the correct manner.

  • A current passport and, in the event that both are different, an attested copy of the insured's and proposer's original document.
  • The online application or the policy proposal form
  • All medical examination reports and records pertaining to the policyholder's health status.
  • Evidence of earnings and a duplicate Tax Residency Certificate (TRC) are required.
  • Evidence of the policyholder's age.
  • Any government-approved document with a valid address that is written in any language, such as a driver's licence, bank statement, or residence card with an address, can be used as proof of address.
  • Foreign nationals must hold a valid Indian work visa in addition to an OCI card or its replacement.
  • The initial premium payment sum.

Who is Eligible to Buy Term Insurance for NRI in India?

In India, the minimum age to purchase term insurance for NRI is 18, and the maximum age is around 60-66 years.

The list of individuals mentioned below is eligible to purchase NRI term insurance in India.

  • Indian citizens with a valid passport who are temporarily residing or employed abroad are known as non-resident Indians (NRIs).
  • Individuals of Indian descent (PIO) or Indian citizens living abroad (OCI): Citizens of foreign nations that satisfy the following requirements, excluding Bangladesh and Pakistan
  • Formerly held a passport issued in India
  • Possesses parents or grandparents who, according to the Indian Constitution or the Citizenship Act of 1955, were Indian citizens.
  • Is the legal partner or spouse of an Indian national

How can I purchase NRI term insurance in India in 2024?

There are two scenarios wherein NRIs can purchase term insurance in India in 2024:

a. While in India

It's simple and quick to buy the best term insurance plan for NRI. All the NRI has to do is locate a preferred insurer and request to buy the policy. After the procedures are finished, the policy is regarded as a typical term plan that Indian nationals have purchased. However, NRIs are required to reveal where they currently reside. The majority of insurers have a list of nations in which they will not provide coverage. Additionally, the NRI might pay higher premiums if they reside in an area with political unrest.

b. From the country in which you currently reside

Buying term insurance for a non-resident alien (NRI) from overseas is a little more difficult. They are required to purchase the policy by mail. The process necessitates that an Indian diplomat and a notary verify the NRI. For verification, the majority of NRIs need an official from the Indian embassy. Indian students pursuing their studies overseas may request assistance with the verification process from their dean or supervisor.

How can NRIs in India claim term insurance in 2024?

In the case of term insurance plans for NRI, a claim can be made in India in 2024 by taking two major steps. The first is to notify the insurance company of the policyholder's death. The second is to understand and complete the paperwork, such as the submission of claim forms, original policy documents, death certificates, medical certificates (if required), employer certificates, post-mortem reports, etc.

FAQs on Term Insurance for NRIs in India

Q. Is NRI eligible for term insurance?

Yes of course. NRIs are eligible for term insurance in India if they fit into the eligibility criterion of big insurers in India such as HDFC Life. NRIs who fall into the required age bracket and provide the relevant documents and forms are eligible for buying term life insurance in India in 2024.

Q. Does the NRI need to be present in India while buying a term insurance plan?

No, it is not usually necessary for NRIs to be physically present in India to buy term plan. Many insurers offer the facility wherein NRIs can buy term life insurance while living abroad. In such cases, NRIs are required to purchase the policy through mail order. The process necessitates that an Indian diplomat and a notary verify the NRI.

Q. Can NRI continue term insurance in India?

If you had earlier bought term insurance in India and then went abroad and became an NRI, you can still continue with the existing term insurance. To be sure about it, contact your insurance provider to enquire if they can keep your existing term insurance plans for NRI active. Generally, most insurers allow NRIs to continue with the term plan purchased in India.

Q. Why do NRIs invest in insurance in India?

NRIs who are living far away from their family and wish to secure their financial future, choose to invest in term insurance in India. Investing in NRI term insurance for your family residing in India not only helps secure their future through the assured cover amount, but also enables NRIs to live with mental peace, knowing their family’s financial future is not in jeopardy.

Q. What are NRE and NRO accounts for Non-Resident Indians?

For NRIs, the NRE (Non-Resident Rupee) account is an Indian rupee-denominated account which offers complete security. NRE accounts can be in the form of savings, recurring deposits, current accounts, or FDs (fixed deposits). The foreign currency you deposit into the NRE account is converted to Rupees.

On the other hand, NRO (Non-Resident Ordinary Rupee) account is a savings or current account held by NRIs to handle the income earned in India. NRO account-holders can both deposit and handle their accumulated rupee earnings easily. But keep in mind that the NRO account enables you to receive funds in both Indian and foreign currency.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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