Life is all about planning. We plan for our jobs, families, and trips. We even plan for the future. However, life is also about surprises. This is the reason people take term insurance plans. These plans provide protection for the people we love in the event of surprises.
Planning for life is even more important for Indians who are abroad. Many Non-Resident Indians (NRIs) support their families in India. Therefore, life insurance for NRI has become an extremely useful option for many people. This option provides peace of mind for the people we love.
In the following paragraphs, we will discuss the term insurance plans and life insurance plans for NRIs in simple words.
What is Term Insurance?
Term insurance is one of the easiest forms of life insurance. This type of insurance provides financial protection for a certain number of years. This period of time is called the ‘term.’ The insurance company pays the nominee if the insured dies during the ‘term.’
If the person dies at the end of the term, the policy will lapse, and there will be no payment. Since the policy is simple and only offers protection, the premium is normally lower compared to other insurance policies.
Example:
Suppose a person wants to purchase a term insurance policy for a period of 30 years.
- Policy amount: ₹1 crore
- Term: 30 years
If the person dies during the 30 years, the family will receive the insurance amount of ₹1 crore, which will help the family pay their expenses, loans, or children’s education.
Why Term Insurance Is Important
Most people think that insurance is meant for elderly people. But the fact is that it is useful at every age.
Here are some of the benefits of term insurance:
- Financial security for the family: In case the earning member is no longer around, the family will have the support.
- Pays off debts: The amount will help in clearing the loan or other debts.
- Helps in the education of the children: The amount will help in the education of the children.
- Low premium costs: Term insurance has the lowest premium costs among other life insurance policies.
What is Life Insurance for NRI?
Many Indians also live and work in other countries. They are called NRIs, or Non-Resident Indians. Despite living and working abroad, they still maintain strong economic links with India, as they may be supporting their parents, spouses, or children who live in India. This is where life insurance for NRI comes in.
Life insurance plans for NRIs allow them to purchase insurance plans in India, despite being abroad. These plans provide protection benefits similar to those of regular life insurance plans.
Why NRIs should opt for life insurance
There are many reasons why NRIs prefer to purchase life insurance plans in India.
1. Supporting families in India
Many NRIs remit money to their families in India. If anything unfortunate were to happen to the NRI, this source of income for the family may come to an end. Life insurance plans ensure that the families still receive support.
2. Lower premium costs
It is possible for insurance plans in India to be lower in cost compared to other countries.
3. Easy financial planning
Many NRIs also have investments in India.
4. Tax benefits
Some insurance plans in India offer tax benefits under Indian taxation laws.
Can NRIs buy term insurance in India?
Yes, NRIs can buy term insurance in India. Most of the major insurance companies allow NRIs to apply for the policy. It is now easy to do this, as most of the steps are now available online. In some cases, a medical check-up is also required.
The documents that are required are as follows:
- Passport copy
- Proof of the applicant’s status as an NRI
- Address proof
- Income proof
In some cases, the policy may also be bought during a visit to India.
Key Features of Life Insurance for NRI
There are a number of features that are part of the life insurance policy, and these are as follows:
1. Flexible policy terms
NRIs can opt to buy a policy that will provide coverage over a number of years, up to the age of 60 or 70.
2. High coverage options
A policy may provide a high level of coverage, which is necessary to protect the family’s finances.
3. Multiple payout options
The amount will be received by the family as:
- A lump sum amount
- Income on a monthly basis
- A combination of both
4. Online policy management
Insurance companies provide an online facility for NRIs to manage their policies from anywhere in the world.
How to Choose the Right Term Insurance Plan
Choosing the right term insurance plan is important. Here are some simple tips:
- Choosing the right coverage amount: The coverage amount should be 10-15 times your yearly income.
- Check the term: The term should be your working term.
- Check the claim settlement ratio: This is the percentage of successful settlements made by an insurance company.
- Compare: Different companies offer different benefits.
Things NRIs Should Check Before Buying Insurance
There are a few things that an NRI should look into before buying insurance:
- Country of residence: There are some special conditions that apply to NRIs based on the country of residence.
- Medical requirements: There are some insurance plans that demand a medical test.
- Premium payment methods: NRIs can use their NRE or NRO accounts to pay the premium.
- Currency conversion: The amount that is paid out will be in Indian rupees.
Common Myths About Term Insurance
There are a number of people who are not aware of the benefits of insurance and thus are not willing to buy it. Here are a few common myths about term insurance that are cleared.
Myth 1: Insurance is expensive
It is not expensive; in fact, it is one of the cheapest tools that can be used.
Myth 2: Insurance is meant for seniors only
It is always better to buy insurance when you are young.
Myth 3: NRIs are not easily able to buy insurance in India
There are a number of insurance companies that are now offering online facilities to buy life insurance for NRIs.
Life is full of responsibilities. We strive hard to build a better future for our loved ones. However, planning for the unexpected is equally important. Term insurance is one such simple yet powerful solution. It provides high financial security at an affordable cost. For Indians who live outside the country, life insurance for NRI is an easy solution to protect family members in India while managing your finances from anywhere in the world.
By choosing the right insurance plan, you can build a safety net for your loved ones. At the end of the day, insurance is not just about money. It is about caring for your loved ones.