A term plan is a type of life insurance that provides coverage for a specific duration, known as the term of the policy. Suppose the insured person dies during the term of the policy. In that case, the death benefit or sum assured will be paid to the policyholder’s nominees. A medical exam could be necessary for some circumstances while getting life coverage. The insurance provider may also ask about your medical history, employment status, and family history.
If the insured person does not die during the policy term, the policy will expire with no benefits. Pure-term insurance is typically less expensive than permanent life insurance due to its lack of returns. It is often used to cover a specific financial need, should the breadwinner of the family die, such as paying off a mortgage or providing for a family in the event of the policyholder’s absence in the future.
As a non-resident Indian (NRI), you may have similar concerns about protecting your loved ones financially in the event of your untimely death. One way to provide this protection is by purchasing term insurance. However, buying term insurance as an NRI can be slightly more complex than it is for resident Indians.
In this article, we will walk you through the steps of buying term insurance as an NRI and provide helpful tips to make the process as smooth as possible.
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Things that NRIs need to remember while purchasing term insurance plans
Here are a few steps that NRI policyholders should remember while buying their term insurance policies:
Step 1: Check for Eligibility
It is important to note that some insurance companies may restrict the policyholder’s age or the maximum coverage amount for NRIs. Additionally, some companies may require that the policyholder have a minimum number of years left on their Indian visa or have a particular type of visa.
Therefore, you must review the eligibility criteria with the insurer before applying for the policy.
Step 2: Choose an Insurer and Plan
Once you have confirmed your eligibility, you can choose an insurer and a term insurance plan that suits your needs. You can do this by comparing various insurers’ different plans and features.
For example, consider coverage amounts, premium costs, and any exclusions or limitations. It’s also important to review the insurer’s financial strength, claims settlement ratio, and customer service experience before making a decision.
It is also critical to consider the tax effects at all three stages of the policy’s life cycle: acquisition, premium payment, growth, and maturity. In addition, NRIs must pay taxes on income earned abroad and be aware of their home country’s tax laws.
When comparing different term insurance plans, keep in mind that term insurance policies for NRIs typically have higher premium rates than those for resident Indians. This is because the risk of death is higher for NRIs, who may live and work in foreign countries with different laws, customs, and safety standards.
Therefore, it is important to carefully review the terms and conditions of the policy to ensure that you are getting the coverage you need at a fair price.
Step 3: Complete the Necessary Documentation
After selecting an insurer and a plan, you must complete the necessary documentation. This can include an application form, copies of your passport and visa, and other documents that the insurer may require. It’s important to provide accurate and complete information to avoid delays or problems later.
In addition, keep a copy of all the documents submitted to the insurer for your records. This will help you track your application’s status and refer to the information later if needed.
Step 4: Pay the Premium
Once the documentation is complete, you will need to pay the premium for the term insurance plan you have chosen. You can make a lump sum payment or choose a premium payment option that best suits your needs. Keep a copy of all the payment receipts and transaction details for future reference.
NRIs must pay premiums through their NRE account if the coverage is purchased in foreign currency. They can also use foreign money to make periodic premium payments using NRO, NRE/FCNR bank accounts. Check the eligibility conditions as well, as Indian insurers cannot sell products and services to person who resident in specific countries.
Therefore, checking the payment options with the insurer before making the final decision is important. You can also utilize a term plan calculator to determine the premium payable for a certain coverage amount.
Step 5: Keep in Mind the Requirement for Indian Address and PAN
When purchasing term insurance as an NRI, you may also be required to provide your Indian address and PAN (Permanent Account Number) for the policy. Therefore, it is important to keep this in mind and to have this information ready before starting the process.
Conclusion
In conclusion, navigating the entire term plan purchase process as an NRI will not be difficult if you are organized and well informed. First, take your time before choosing a suitable policy for your requirements while taking expert guidance if needed.
Then, weigh your options and select a strategy that suits your requirements. Adhering to the above-mentioned pointers will help you in this regard.
Also read: Everything You Need to Know About Term Insurance Tax Benefits
