If you are an NRI, protecting your family’s financial future with a term insurance policy is a wise move. However, picking the correct plan might be difficult, especially with many alternatives in India.
A decent term insurance plan provides financial security for your loved ones in your absence, but as an NRI, you must prioritise specific factors. Every element, from coverage flexibility to tax advantages, is important. So, what makes a term insurance plan appropriate for NRIs? Here’s a quick guide to identifying the important qualities to look for.
15 key features to look for in term insurance plans for NRIs
1) Global coverage
As an NRI, you may live and work in different countries. A term insurance plan with global coverage ensures your family is financially protected, no matter where you reside.
Let’s say you move to Europe, the Middle East, or anywhere else; your insurance policy should still be valid, and nominees should have no problem claiming benefits. Make sure that the insurer of claims is always worldwide without any jurisdictional constraints.
2) Flexible premium payment options
NRIs often have incomes in foreign currencies, so a good term insurance plan should offer flexibility in payment. Many insurers allow premium payments in Indian Rupees (INR) or foreign currencies like USD or AED.
Also, you can do monthly, quarterly or annual payments and it makes budgeting easier, especially when you have to pay expenses in different countries.
3) High sum assured
The sum assured is the amount that your family will receive should you die. Often, NRIs require a higher sum assured to take care of international education costs, healthcare and the lifestyle which might be more expensive in India.
Decide on a plan which provides you with an amount that covers your long-term needs and analyse your family’s financial requirements.
4) Critical illness cover
Medical treatments abroad can be very expensive especially if it is related to critical illnesses such as cancer, heart condition and organ failure.
Critical illness cover is a very good addition to your term insurance plan as it provides a lump sum amount at the time of diagnosis which can be used towards treatment, travel or any other related medical bills. It is an extra layer of financial security for health emergencies you can’t predict.
5) Rider benefits
There are additional benefits you can put on your base policy. Common riders for NRIs include:
- Accidental Death Benefit: It provides extra coverage in case of an accidental death.
- Disability Cover: If you are permanently disabled and can’t work, they offer financial support.
- Waiver of Premium: Ensures that future premiums are waived if you face a total disability or critical illness, keeping the policy active. These riders enhance your coverage and prepare you for specific risks.
6) Ease of purchase
A term insurance plan should be easy to buy for NRIs. Online applications are allowed by many Indian insurers, and physical presence in India is not required.
The digital verification providers should look for insurers who can assist in an easy purchase process by uploading documents through the online portal and conducting video-based KYC.
7) Medical examination requirements
NRIs, find it challenging to get some term insurance plans as some of them require medical examinations.
Find out if the insurer lets you have medical tests done in your current country of residence. If the sum assured is within a set limit or the applicant is fit and fine, insurers can waive medical tests.
8) Policy tenure
With a long policy tenure, you know your family is protected during your most trying times. Pick a plan that will have a tenure which matches your financial obligations like your children’s education, marriage or home loans.
Many of these insurers offer policies that cover you until the age of 75 or even 85, giving you some long-term security.
9) Tax benefits
Premiums paid by NRIs are eligible for deductions under Section 80C for up to ₹1.5 lakh annually.
Also, the proceeds received by your nominees are tax-free under Section 10(10D) for your family.
10) Claim settlement ratio
The claim settlement ratio (CSR) shows the percentage that an insurer settles his claims. The higher the CSR is, the more reliable and efficient the claims processing of an insurer.
Choose a provider that has a CSR above 95%, so that your family can easily get access to benefits with no unnecessary delays or disputes.
11) Repatriation of funds
Being an NRI, your family might be living in a different country. Find out if the insurer permits repatriation of the claim amount to foreign bank accounts.
This feature will make it easy to handle finances during challenging times as your nominees will get the funds directly in their local currency.
12) Nomination flexibility
Your nominee could be someone living abroad or in India.
Pick out a term insurance for NRI which allows you to nominate anyone, no matter where they live, so your family can enjoy the benefits of the policy without any legal issues.
13) Affordability
Term insurance plans are, generally, cost-effective and NRI should compare their premiums with different insurers to choose a plan that fits their budget.
Instead of looking for the cheapest plan, search for one that offers affordable premiums and essential features.
14) Currency options
Term insurance plans in foreign currencies like USD, GBP, or AED can be taken up by NRIs so that they do need not to worry about exchange rate fluctuations when paying premiums.
This is particularly useful for those who will be using foreign currencies to earn, but who want to keep financial ties with India.
15) Customisable plans
No one family will have the same financial needs. Go for a term life insurance policy where you can customise the riders, payment terms and sum assured.
This means that the policy is designed to suit your specific needs be it funding your child’s international education or providing security for your spouse’s future.
Ending note
When you are an NRI, selecting the right term insurance plan for your family’s financial future is important, no matter where you are. Look at global coverage, flexible payments and riders and critical illness cover. Also, check that the plan provides ease of purchase, high payment claims percentages and tax benefits.
With appropriate study and preparation, you can select a term insurance plan that gives your loved one peace of mind and financial stability while allowing you to focus on your life overseas. Remember, a good plan now may make a huge impact tomorrow.