For Non-Resident Indians (NRIs), obtaining a term insurance plan in India is a wise means of securing their family’s financial future. Term plans for NRIs are provided by most Indian insurers, with extensive coverage at reasonable premiums. Not only do these plans provide financial security, but they also have tax advantages and flexible settlement options.
If you are an NRI seeking the best term insurance plan, here is all you need to know about eligibility, benefits, and what to look for.
Eligibility for NRIs to Buy Term Insurance in India
NRIs, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) can purchase a term insurance policy from Indian insurance companies. The eligibility conditions may differ, including:
Age Criteria: Generally between 18-65 years
Residency Status: Should submit valid proof of NRI/PIO/OCI status
Medical Tests: Depending on the amount of coverage, insurers might ask for a medical test, either in India or at an insurer-approved overseas facility
Premium Payment: Premiums must be paid in INR, even if funds originate from NRE/NRO accounts
Why NRIs Should Buy a Term Insurance Plan in India
Affordable Premiums
Indian term insurance policies provide relatively low premiums in comparison to what is offered by policies in most foreign nations.
Low Premiums for High Cover
NRIs are able to avail of high life cover at relatively low premiums, providing sufficient financial security for the family.
Global Protection
Many top term insurance plans provide global protection, but coverage may be subject to restrictions based on the country of residence. Insurers may exclude certain high-risk regions.
Flexible Pay-Out Options
NRIs can make their term plans flexible in terms of settlement through options like a lump sum, monthly income, or a combination of both.
Tax Benefits
U/S 80C of the Income Tax Act, the premium paid for a term insurance policy in India is deducted to calculate taxable income. According to Section 10(10D), the death claim is free from taxes.
How Can NRIs Select the Best Term Insurance Plan?
NRIs must consider the following factors while choosing the best term insurance plan:
1.Ratio of Claim Settlement (CSR)
To ensure a seamless claim settlement for your family, pick insurers with a high claim settlement ratio.
2.Policy Tenure
Opt for plans that offer long-term insurance, i.e., until the age of 75 or more.
3.Rider Options
Add riders such as:
✔ Critical illness coverage
✔ Accidental death benefit
✔ Waiver of premium
4.Premium Payment Flexibility
Select a plan that enables premium payment in INR or foreign currency via NRE/NRO accounts.
5.Convenience of Purchase & Servicing
Certain insurers enable NRIs to buy policies online without the need to travel to India. Ensure the insurer has online servicing for policy changes and claims. This will undoubtedly give you more convenience and help save you time as well.
Keep these pointers in mind while selecting the best term insurance plan. It should be one that aligns with your needs while ensuring the coverage and features that you want. Compare multiple insurers and plans thoroughly before coming to a decision.
