Raghu, a resident of Canada, wanted to purchase a term insurance plan in India to secure the financial requirements of his family in case of any eventualities. But being an NRI, Raghu often wondered whether he could avail the benefits of a term insurance policy for NRIs, just like resident Indians. Then, one day, he called his friend, Manoj, a financial consultant based in India. Manoj told him that not only was he eligible for a term insurance plan in India, but could also avail of several benefits, just like resident Indians. Raghu has henceforth purchased a term insurance plan for NRIs.

Any NRI subscriber must first understand the basics of a term insurance plan.

What is a term insurance policy?

A term insurance is a specifically designed life insurance policy that protects an individual’s family and provides them financial security in case of any eventualities. Like most insurance plans, an individual pays a premium for a given term. If the individual passes away during that term because of an accident or due to health reasons, the nominee is assured a death benefit equal to the value of the plan. The premiums are calculated on the basis of the health conditions, the life expectancy and the age of the individual. Insurers often ask the individual to conduct a medical check-up prior to finalizing the policy.

How to avail benefits of term insurance for NRIs?

One can purchase the best term insurance policy for NRIs while visiting India. After completing the formalities pertaining to underwriting on the policy, the NRI policyholder can avail the benefits of the policy, just like a resident Indian. Alternatively, NRIs can purchase the policy in the countries of their residence through Mail Order Business. Then the subscriber has to get the policy verified through a notary, an Indian diplomat or an official of the Indian Embassy. Even students can avail of the benefits of a term insurance after getting the policy verified through university officials like dean or supervisor.

What are the eligibility conditions to avail benefits of term insurance for NRIs?

Any NRI who is between 18 years to 60 years can avail the benefits of the policy as per the terms and conditions of the insurer. Generally, the tenure for the policies available for NRIs range from 6 months to 25 years, while sum assured for NRI term plan usually is from Rs 2 lakh to Rs 1 crore. However it varies from different policies of Insurance companies so its best to speak to a financial advisor who can guide about the right policy. Insurance companies ask for documents like proof of age, income proof, medical health report, attested copy of passport along with application amount commensurate with the first premium amount. Any subscriber should choose the best term insurance policy for NRIs after keeping in mind that the sum assured in the policy is contingent upon a variety of factors, including the nature of profession/job, income of the policyholder and country of residence.

What online premium payment modes can be used by NRI?

An NRI can submit payment of premiums through various online modes like remittances in foreign currency, Foreign Currency Non Resident (FCNR) account, NRE (Non Resident External) account or NRO (Non Resident Operational) account. The NRI policyholder should be aware of the terms and conditions pertaining to internet banking along with those on payment from different NRI accounts while applying for the policy. This can help a subscriber to select the best term insurance policy for NRIs.

What are the benefits of term insurance for NRIs?

Benefits for term insurance remains the same for residents of India as well as NRIs. Along with providing death benefits to the policyholder’s family, the term insurance plans offer tax-saving benefits under Section 80C of the Indian Income Tax Act. Premiums up to 1.5 Lakhs including for the individual, the spouse, and the kids can fall under this category subject to other investments made by the individual. Death benefit payouts to the nominee are exempt from tax under Section 10D. Along with these, any NRI can top the existing term plan with term riders. This provides additional coverage on top of the existing plan at a fraction of the cost of the insurance plan.

One can select the best term insurance for NRIs after a careful perusal of the insurer’s policy document along with the fine print. An NRI can select a term insurance plan from Generali Central also, which comes with a lot of flexibility. NRIs also have the option to choose plans that would return all the premiums paid for the cover if the policyholder survives the tenure of the cover.