Term insurance is the simplest method to secure your family’s financial stability. As you progress through your career and family life, your financial commitments are bound to increase. Term life insurance is a cushion to support your family to strive for their dreams without worrying about the financial implications if you are not around. Life cover also helps in settling debt obligations. In India, both domestic and non-resident individuals can purchase term insurance.
Who is a Non-Resident Indian (NRI)?
Many Indians now have international careers with dynamic work arrangements. Some are placed overseas for a few years and come back. Many others work abroad for a few months and the remaining year in India. The definition of a “Non-resident Indian”is as an individual who has not resided in India for a certain number of months in a year. Additional conditions are also prescribed.
Can NRIs Purchase a Term Insurance Policy?
NRIs can purchase a term insurance plan according to their needs. Their physical presence in India at the time of purchase is not required. Even in policies that require a medical examination, it is enough if the applicant gets a certified report from a qualified medical professional in the country where they reside at the time of application.
Why is Term Life Insurance Important for NRIs?
In many families, the primary earning member is the NRI working abroad. The family meets their expenses and saves for future needs from the remittances received. They also assume loans such as for a home, a vehicle, children’s marriage, and so on.
However, if the NRI family member were to meet an unfortunate death due to any reason, the financial backlash would be very severe. Besides the emotional trauma, the burden of loans and an uncertain future could derail the family completely. To protect the family from such distressing circumstances, it is advisable to purchase life insurance cover in India for the non-resident primary earning member.
How Can NRIs Continue Their Insurance Coverage?
Many Indians wonder about insurance coverage when they become non-residents. The main query is what would happen to their term insurance policies. The answer is the policies will continue to run if the premiums are paid without any break.
For example, if you have purchased a Tata AIA term life insurance policy, you can pay the premium multiple online modes of payment, such as debit/credit card payment, net banking and so on. Even if you move abroad for work, the coverage will continue to be available.
How Can NRIs Pay the Premium on Their Term Insurance Policies?
It is always better to complete the term insurance transactions online. With the widespread availability of digital banking channels, NRIs can either pay through international credit/debit cards or use the funds in their NRO account to pay the premium on the due dates. The NRO account is designated in rupees. You can also pay the premium as a lump sum amount if allowed under the policy terms.
What Documents are Required to be Submitted by an NRI Purchasing a Term Plan in India?
Term insurance in India for NRIs can be easily purchased from the insurance company’s website or an insurance aggregator. The following documents should be submitted while purchasing the policy:
- Attested copy of the passport
- Proposal form duly filled up
- Identity proof and address proof (local and overseas)
- Copy of the income or earnings statement
- Medical report certified by a qualified practitioner if a health check-up is required
Along with these documents, the first premium on the policy should be remitted to the company. Apart from these documents, the insurer might also need some specific documents.
What are the Salient Points of Term Plans Issued in India to NRIs?
Term insurance cover is essential for a person employed abroad to protect their family in the case of any unfortunate eventuality. Purchasing online term insurance for NRIs is a convenient method to complete the process when the individual is in the country on a holiday or family visit or before moving abroad. However, there are a few important points that NRIs should consider while purchasing the term insurance plan. These are discussed briefly here.
- Country of residence: Insurance companies allow their policies to hold good in several countries but exclude a few countries where the coverage is not available. Therefore, the NRI must clarify whether the insurance company they have chosen offers coverage in the country of residence.
- Obligation to disclose full medical history: The NRI applicant should fully disclose lifestyle habits, pre-existing illnesses and any other critical information regarding their health status. If any misrepresentation or suppression is discovered later, the policy may become invalidated.
- Duty to notify transfer abroad: If the policyholder decides to move to a foreign country for a considerable time, they should notify the insurance company. Such disclosure is necessary to ensure that the coverage continues to be available in the other country or be modified suitably.
The need for term insurance has always been evident from the support it offers to the family of a deceased person. For non-resident Indians, the requirement is even more important considering they live and work in unfamiliar and distant locations. NRIs can keep their families back home safeguarded from financial distress with the right amount of coverage and riders# based on specific requirements.