Purchasing a term insurance policy while residing abroad might seem like you’re caught up in a tangle of formalities and detailed clauses. If you are an Indian living overseas, safeguarding your family back home is likely a top priority for you. This manual simplifies everything into easy steps so you can select an appropriate plan without stress.
What is NRI Term Insurance?
A term insurance policy is the most straightforward type of life insurance. You make a regular payment (premium), and the insurer guarantees to pay a substantial amount to your beneficiaries if you pass away.
For a Non-Resident Indian (NRI), term insurance for NRI works just like it does for residents, but with a few extra benefits and rules. It assures you that your parents, spouse, or children who reside in India will be financially independent, irrespective of your location in the world.
Why Should an NRI Buy an Indian Term Plan?
One might ask, “Why shouldn’t I just buy insurance in the country where I live?” While it is a choice, purchasing a plan from India generally works out better for the following reasons:
- Lower Costs: Often, Indian plans cost less than the ones in the US, UK, or UAE.
- Simplified Claims: If your family is in India, they can simply contact a local company and get the money credited to an Indian bank account.
- GST Benefits: Besides, you may even save as much as 18% on your premium! Being a non-resident, if you pay from a foreign- or non-resident-issued bank account (like an NRE account), you are usually GST-free.
How to Choose the Right Plan
Make sure you don’t just choose the first plan you see on TV or any ad. To help you find the “best” plan that fits your specific needs:
1. The Cover Amount
How much money would your family need? Consider your home loan, your children’s school fees, and the daily expenses. A good starting point is to select a cover that amounts to 10 to 15 times your annual income.
2. The Claim Settlement Ratio (CSR)
This is a figure that reveals the percentage of claims a company settled out of every 100 claims lodged. So, look for a company with a CSR of 97% or 98% at least. This will mean that the company is trustworthy.
3. The Policy Term
Would you like your coverage to last till your retirement at 60, or would you prefer to have it till you are 85 years old? Generally, it is best to keep your coverage until the age when you intend to stop working.
The Buying Process: Step-by-Step
Getting a term insurance plan for NRI is now almost completely online. Actually, you do not even have to come to India to sign the documents.
- Step 1: Compare Online. First, use a website to compare different insurance providers. Check the prices and what they offer.
- Step 2: Fill out the form. Try to be as truthful as possible. Share details about your health, your employment, and whether you smoke or drink. If you are honest now, you will save your loved ones from troubles later.
- Step 3: The Medical Check-up. It’s the thing that scares most people. Nowadays, quite a few companies offer “telemedical” exams so a doctor can conduct a video call interview with you. Sometimes, you’ll have to physically go to a clinic in the country where you live, and the company will inform you how to send the report.
- Step 4: Document Upload. Aside from your passport and visa copy, you will also need to provide recent pay stubs, at least the last 3 monthly, and a bank statement.
- Step 5: Payment. The recommendation is to use your NRE/NRO account for payment because it leaves a very smooth and clean paper trail.
Real Insights: What No One Tells You
The “Home Country” Advantage
If you intend to relocate to India one day, your Indian term insurance policy will continue to be effective. You are not required to do anything different. It is just a matter of continuing to pay the premium in rupees once you are back.
Be Mindful of the Time Zone
While taking the policy, you will be interacting with licensed agents based in India. It is a good idea to give them a WhatsApp number so that they can contact you at your evening time, which is usually morning or afternoon in India.
Video Verification
Most insurers will require you to record a brief video as proof of identity in which you will have to hold up your passport and say your name. It is a straightforward measure of security to ensure that it is indeed you.
Common Myths About NRI Insurance
Myth: “I have to be in India to buy the policy.”
Fact: You can buy it from your living room in London, Dubai, or New York.
Myth: “The company won’t pay if I die outside of India.”
Fact: Most modern term plans include a “Global Cover” feature. Once you inform the company of your residential address at the time of purchase, you will be covered globally.
Key Documents You Will Need
Keep these ready in a folder on your computer to speed up the process:
- Passport: Both front and back pages.
- Visa/Work Permit: Proof that you are living abroad legally.
- Income Proof: Last 3 months’ salary slips or your latest tax filing.
- Photos: Recent passport-size digital photos.
- Address Proof: A utility bill from your current home abroad.
Conclusion
Life is full of surprises, and not all of them are good. A term insurance plan is a gift of safety you give to your family. For an NRI, it is a way to stay connected to your roots and ensure that your loved ones are taken care of, no matter the distance.
Take an hour this weekend to go through the plans side by side. This is very little time to invest in a lifetime of safety. Get a plan that suits you in terms of money, be truthful while filling out the form, and sleep peacefully after securing your family’s future.
