NRI term insurance: a guide to protecting your family in India

To ensure career growth and prospects, an increasing number of Indians are seeking opportunities abroad, becoming NRIs. Irrespective of the foreign country you are residing in, term plans prove to be ideal for ensuring financial security and protection for family members during any unfortunate event. With this coverage amount, the family members can write off outstanding dues and debts and continue with their living. 

Term plans refer to the purest form of life insurance where the concerned policyholder pays the premium for a pre-determined fixed tenure to ensure financial coverage. They offer death benefits to the designated nominee or beneficiary if anything happens to the policyholder, provided the policyholder and the insured individual are one and the same. 

NRI term insurance works the same way as any other standard term plan. 

Features of NRI term insurance

Although the working strategies of NRI term plans are similar to standard term plans, they maintain certain typical characteristics:

1. Easy hassle-free pay:
   If you buy a reliable NRI term plan online, premium payments become very quick and simple. NRIs can easily use any foreign bank account or a dependable Internet banking method utilising the NRE, NRO, or FCNR account numbers as applicable. Term plans allow reasonable premiums and offer hassle-free payment options.
   
2. Choosing the desirable life coverage:
   NRIs can opt for a term plan with any coverage amount, that suits their family’s requirements the best. Consider the existing assets, liabilities, income, and expenses before deciding on the final coverage amount.
   
3. Policy term adjustment:
   Several Indian insurance giants allow term insurance flexibility. This implies that they can choose from a wide array of flexible plan tenures like 10 years, 20 years, and so on. They can also choose a 25-year term insurance policy based on their requirements. Nowadays, there are special term plans available for NRIs that offer coverage for up to 100 years.
   
4. Simple documentation:
   While buying an NRI term insurance policy, you need to provide certain documents. It usually requires a copy of your passport, application form, age proof, and income proof along with your physical examination.
   
5. Tax benefits:
   NRIs are eligible for tax benefits under Section 80C. for premiums paid towards term plans. Section 10 (10D) of the IT Act specifies the circumstances of insurance payout tax exemptions. 

Benefits of NRI term insurance

Some of the most highlighting benefits of NRI term plans include:

1. Tax advantage: Term plan premiums paid under 80C and the premiums paid towards other additional riders, NRIs qualify for IT benefits.
   
2. Death benefits: Term plans offer the sum assured amount to the designated nominee or the beneficiary in the case of any unfortunate event of the insured individual, who is the policyholder. This payout is tax-free.
   
3. Financial security: For NRIs, term plans prove to be very secure and guaranteed instruments of financial protection for their family. This is a cost-effective method to ensure the economic security of your beloved family members, retaining your peace of mind while living abroad.
   
4. Payment option: NRIs in India enjoy multiple premium payout options for term plans. It can be a regular income, a lump sum, a combination of regular and lump sum or increasing coverage with time. Considering your family’s lifestyle choices and preferences, you can opt for one that suits you the best. 

Why should NRIs purchase term plans from India?

Term insurance for NRIs offers multiple benefits including tax benefits, a simple and user-friendly claim settlement procedure for the dependents staying in India, and guaranteeing the family’s economic stability through the pre-fixed coverage amount, reasonable premium rates, and retaining your peace of mind. You can be at peace knowing that at least your family does not have to face any financial constraints even after your untimely demise. However, to ensure security to such an extent, it is essential to critically analyse and decide how much coverage you need. 

Documents needed for purchasing NRI term insurance 

The essential documents that you need to produce while purchasing term plans for NRIs include:

1. A copy of the current passport or an attested copy of the insured’s and the proposer’s original document, as required
2. The plan proposal form or the online application
3. All the relevant health checkup reports and records about the health status of the concerned insured individual
4. Earning/income proof and a copy of the TRC certificate
5. Age proof
6. Any government-approved document with an authentic address like DL, bank statement, residence card, etc. for address proof
7. Foreign nationals must possess an authentic Indian work visa apart from the OCI card or its substitute
8. The primary premium payment amount 

Conclusion

Term insurance for NRIs is a very reliable source of income security for dependent family members during challenging circumstances. Considering all the relevant aspects like your income, number of dependent family members, age, pending loans, etc. decide the coverage amount so that your family is well taken care of even in your absence.