Mumbai: Living abroad generally means getting a better income, developing one's career, and enjoying a pleasing lifestyle. On the other hand, it also brings about a very big duty: safeguarding your family financially in your home country. If your family members rely on you for their living, then obtaining the right life insurance policy would be extremely crucial.
There are a lot of NRIs who are not clear about the possibility of purchasing insurance in India. Some assert that the going is tough, while others are concerned about being unable to get claims if abroad. However, the fact is that buying term insurance and life insurance for NRIs is easy, legal, and very advantageous. This article presents the whole information in an easy and direct manner.
Understanding Term Insurance
Term Insurance is the most basic and most economical kind of life insurance. It is only meant for the preservation of one's wealth. In this plan, you will pay a certain amount as a premium for a selected period of time, for example, 20, 30, or even 40 years. Then if the insured person dies during that time, the insurance company will pay the designated person the amount guaranteed.
This money will help the family to cover daily expenses, pay off loans, send kids to school, and have a similar lifestyle. If the insured person lives throughout the period of the policy, then the plan automatically ceases without any maturity benefit. Due to the fact that no money returns to the policyholder, term insurance provides extremely high coverage at a low price.
What Is Life Insurance for NRI?
Life insurance for NRI means life insurance policies that are available to overseas Indians. In terms of functionality, these policies are on par with those for residents of India. The lone distinction is that the policyholder earns his/her income overseas and has residency in a foreign land.
NRIs can get various types of life insurance, such as term insurance, endowment plans, ULIPs, and whole life policies. Among these, term insurance is the most sought-after option, as it gives maximum coverage at the lowest premium.
Why NRIs Should Buy Life Insurance in India
The primary rationale NRIs present for purchasing life insurance in India is the proximity of their families to India. Usually, they have parents, spouses, or children who are financially dependent on the NRI's income. An Indian insurance policy simplifies the claim process for family members, making it less stressful. Another factor is price. Term insurance policies in India are significantly cheaper in comparison to many other countries. So, NRIs can avail of high coverage at a low premium, which is a good decision money-wise.
Moreover, most of the family outgoings, like home loans, children’s education, and medical expenses, are in Indian currency. Obtaining life insurance in India will make sure these costs are covered without any fear of losing money due to currency fluctuations.
Who Is Eligible to Buy Life Insurance as an NRI?
An individual is regarded as an NRI if he/she remains outside India for work, business, or other purposes and receives his/her salary abroad. Insurers even permit holders of OCI and PIO cards to purchase insurance policies.
There are no restrictions with regard to the profession, provided the source of income is legitimate and all documents are in order. Factors determining eligibility are mainly age, health status, income, and the country in which one resides.
Can NRIs Buy Term Insurance While Living Abroad?
Definitely, NRIs are allowed to avail term insurance while being in out of India. The majority of the insurers have made the process easier for them by providing an online application throughout the world.
Documents Required for Life Insurance for NRI
The documentation process for NRIs is really easy. A copy of the passport, visa, overseas address proof, Indian address proof, income proof, and bank account details are usually required by insurance companies.
Medical Tests for NRIs
Depending on a person's age, insurance company amount, and medical history, testing is a must for them. Basic tests may be required for young people applying for small cover, while others applying for large cover may have to go through detailed medical checks.
How Much Term Insurance Cover Should an NRI Buy?
As a rule of thumb, one should buy term insurance policies with coverage at least 10 to 15 times his annual salary. But the precise amount to purchase should consider the financial needs of your household.
Take into account the cost of living, any debts you might have, and the education of your children as long as your family goals are going to be met. Enough coverage will ensure financial hardships are not faced by your family during your absence.
Premium Payment Alternatives for Non-Residents Indians
The non-resident Indians have several premium payment methods to choose from. Depending on the insurer, payments can be made either through NRE or NRO bank accounts, international debit or credit cards, or foreign bank accounts.
Payments of the premiums can be done on a monthly, quarterly, or annual basis. With online payments, businesses are able to get rid of one of the most irritating and time-consuming processes.
NRI Life Insurance Claim Settlement Procedure
The NRI life insurance claim settlement procedure is very easy and very open. If the policyholder dies, the nominee is to present the death certificate, policy documents, and proof of identity to the jury.
The insurance company then verifies and credits the claim amount directly to the nominee’s bank account in India. The relatives do not have to go through the hassle of foreign legal processes and traveling abroad.
Key Factors to be Considered by NRIs before Purchasing
Term insurance should be backed by a solid insurer’s claim settlement record and good reputation; these factors are to be checked by NRIs long before buying. Confirming that the policy offers worldwide coverage and lacks country-specific exclusions is also a point of concern.
Selecting the right policy duration is equally important. The protection period should extend until all the major financial liabilities, including education for kids and repayment of loans, are finished.
Widespread Misunderstandings About Life Insurance for NRI
A large number of NRIs think that death in a foreign country would not be covered by Indian insurance policies. This is not true. The majority of term insurance plans offer worldwide coverage. Another myth is that NRI life insurance cannot be obtained without taking a trip to India. In fact, most of the processes are now completely digital and can be done online.
Term Insurance vs Other Life Insurance Plans for NRI
Taking into account only protection, term insurance is a solitary option. In contrast, other life insurance plans are packaged together with protection that comes along with savings or investments. Term insurance secures larger amounts for a lower price thereby being perfect for family security. For investment purposes, NRIs can opt for different financial products instead of mingling them with insurance.
Best Time for NRIs to Buy Life Insurance
The earliest possible time is the beand better premiums.hase of term insurance. The purchase at a young age comes with a health eligibility of lower premiums and better. The postponement of the deciNon-Residentin both increased cost and risk.
Conclusion
The purchase of term insurance and life insurance for Non-Residents Indians (NRI) is an intelligent and responsible financial act. It guarantees that your family will not lose financial support even if you are miles away. The insurance is not a matter of returns or savings. It is about the protection, peace of mind, and responsibility. The early selection of the right plan can greatly influence the future of your family.
