Living abroad can be challenging. You carve a new career and a new life in a foreign land, but a part of your heart always stays tethered to India. You work hard to send money to your parents, to pay off loans, or to fund your children’s promising future. Family is your priority. Protecting them from life-threatening situations becomes your utmost responsibility. This is when a term insurance plan can be your best companion.
Buying term insurance for NRI from Indian companies is one of the most prudent financial decisions that overseas Indians can make. It guarantees coverage for your near and dear ones, regardless of where you are on the globe.
Let us look at what a term insurance plan entails and why it is a must-buy for people living outside the country.
What is a term insurance plan?
A term insurance plan is a financial product that an individual buys from an insurance company by paying a comparatively low premium amount. The insurer, on its part, undertakes to pay a hefty sum of money to the nominee in case of the policyholder’s unfortunate demise within the specified time frame.
The money paid out by the insurance company is known as the sum assured, and it acts as a financial safety net for one’s dependents in case the breadwinner dies prematurely.
Term insurance plans typically do not have any maturity benefit if you live beyond the policy term.
Features of Term Insurance for Indians Living Abroad
Some key features make buying a term insurance for NRIs lucrative and convenient. Indian insurance companies offer highly competitive life cover products that beat the offerings of foreign insurers handsomely.
Some of the key features of term insurance policies for NRIs include:
Global Coverage:
The insurance coverage applies all over the globe, providing location flexibility for policyholders. Whether someone is residing in Dubai, Singapore, London, or New York, the overseas Indians, including PIOs (Persons of Indian Origin) and OCIS (Overseas Citizens of India), will get all the life coverage benefits.
Lower Premium Rates:
As compared to buying life insurance directly in whichever country an individual is staying, purchasing a term plan from an Indian insurance company offers significantly lower premium rates. Moreover, one purchases an appreciable amount of coverage at an affordable price.
Convenient Online Video Medical Test:
Usually, an individual does not need to go for a physical medical examination for a term plan. Most companies offer online video testing facilities wherein a customer can get assessed from their residence abroad.
Easy Premium Payments:
Premium payments are conveniently done through one’s NRE/NRO/foreign bank account using credit cards or net banking. In addition, all nominees should be residents of countries approved by the insurers.
Tax Benefits:
NRIs may claim a deduction for eligible life insurance premiums under Section 123 read with Schedule XV of the Income-tax Act, 2025, subject to the prescribed conditions and the overall ₹1.5 lakh limit for specified payments. This deduction cannot be claimed under the concessional tax regime under Section 202. Death proceeds from eligible life insurance policies are generally excluded from taxable income under Section 11 read with Schedule II, subject to applicable conditions and exclusions.
Eligibility Criteria for Buying a Term Insurance Plan
In terms of purchasing a term insurance plan as an NRI, one has to meet a few basic eligibility criteria. They include:
Age Requirement:
An ideal applicant should be between 18 and 65 years of age at the time of buying the insurance plan. The younger one is, the lower the premium amount.
NRI Status:
An individual should be a Non-Resident Indian (NRI)/PIO/OCI as per the Government of India guidelines.
Income Expectation:
One should be engaged in a well-settled business or employment abroad. Most companies also take salary slips and income evidence via bank statements.
Country of Residence:
The applicant should reside in a place approved by the insurance company.
Documents Necessary For Application
Here is a list of documents one should have readily available before applying for a term insurance plan online:
- A scanned copy of the passport, including the first and last pages with a valid visa.
- Evidence of the work visa, green card, or residence permit.
- Utility bills or rental agreements stating the applicant’s foreign residential address.
- The last 3-6 months of salary slips or income evidence via bank statements.
- A passport-sized photograph of the applicant.
Trends to Consider While Selecting a Term Insurance
Since there is a wide selection of term insurance products on offer, we recommend going through the following pointers while buying the life insurance plan:
Determine the extent of Sum Assured
It is essential to estimate an appropriate amount of coverage that one will need in their lifetime. A suitable benchmark would be to ensure the cover should be at least 10x to 15x of one’s yearly income. Nominees can use the cover amount to cover up outstanding household liabilities, children’s school fees, or home loan repayments.
Evaluate the Claim Settlement Ratio
Claim settlement ratio refers to the percentage of successful claims approved by an insurer against the total number of claims made. A ratio above 98% is desirable while purchasing a term insurance plan for overseas Indians.
Go Through Add-on Riders
Most insurers also provide optional add-on riders to their term insurance policies for a minimal additional premium amount. Critical illness cover and accidental death rider top the list. An individual may select from a variety of riders, and each will offer different benefits.
Settling the Mode of Payout
It is possible to choose how the nominee will receive the death benefit proceeds. One can opt for a lump-sum payment or select a monthly income plan where the nominee receives payouts as an income for a specified period.
Conclusion
Distance can never dilute the love one feels towards their family members. Getting a term insurance plan ensures that one’s beloved family will never face financial hardship while being geographically thousands of miles away from their protector and provider. A term insurance plan helps the family to meet both their fundamental and discretionary needs.
It gives the much-needed financial stability to lead a life of dignity and fulfill their aspirations, big or small. Therefore, an overseas Indian should take the initiative and invest a few minutes to compare and research and buy the most suitable term insurance for NRI.
