By Mitch Rice
A Term Plan for NRI is conceptualised for Non-Resident Indians, Overseas Citizens of India or Persons of Indian Origin cardholders, & their families to fulfil the financial requirements. Irrespective of the place of residence, the term plan provides financial security along with the death benefit in the absence of the policyholder.
Term Insurance for Non-Resident Indians (NRIs) offers financial security to their family members, with reasonable premium costs. It offers several benefits, such as flexible policy terms, easy claim settlement processes, cost-effective premiums, etc. However, one should take into consideration certain factors, such as documents required, eligibility criteria, taxation benefits, medical examination required, etc., thus helping in choosing an insurance company.
Eligibility Criteria
One can purchase a term plan in case of an NRI having a minimum age of 18 years & a maximum of 65 years of age. Provided below is a list of individuals who can buy a term plan in India:
- Non-Resident Indians (NRIs)
They are a citizen of India who is temporarily living in India, having a valid Indian passport.
- Overseas Citizen of India (OCI) or Person of India Origin (PIO)
They are foreign nationals except for Pakistan & Bangladesh, having the mentioned criteria fulfilled:
- Spouse of an Indian National
- Parents or grandparents who were Indian citizens
- Previously, having an Indian passport
- Foreign Nationals
They are foreign nationals residing in India.
Reasons to Buy a Term Plan in India by NRIs
While looking forward to the family’s financial future, choosing a plan from the best term insurance company in India will bring multiple benefits that best suit your requirements. These are as mentioned below:
- Cost-Effective Protection for Family Members:
A term plan often offers a considerable amount of coverage at affordable premium rates. Hence, these plans offer financial security to their family members within their budget.
- Significant Tax Advantages:
It offers deduction of tax on the premium amount paid u/s 80C. Additionally, the death benefits received are also exempt from tax, hence increasing the financial strength of the NRI.
- Convenient Payment & Management:
It offers easy modes of payment, which also include payment through NRE or NRO account, digital platforms, etc., which can be accessed from anywhere in the world.
- Global Coverage with Local Benefits:
This term plan offers worldwide coverage, ensuring protection & safety irrespective of where the NRI lives. The family members residing in India will continue getting benefits.
- Simplified Process Despite Distance:
This plan often allows the policyholder to get themselves examined in their country of residence, verifying documents virtually, without any requirement to visit India.
Steps to Apply for a Term Plan by NRI
Provided are the steps to be followed to apply for an NRI term insurance:
Step 1: Conduct Research about the Plans
Assess the term plans available & compare those that can be applied by NRI individuals.
Step 2: Choose a Plan
Choose a plan, depending on certain factors, such as policy tenure, coverage required, affordable premiums, turnaround time, claim settlement ratio, etc.
Step 3: Fill Out the Application Form
Fill out the accurate details, which include your personal, financial, & occupational information.
Step 4: Submit the Documents
Submit the required documents, such as a visa, address proof, passport, photographs, etc.
Step 5: Conduct Medical Check-Ups
Get the medical check-ups performed either in India or abroad, as required by the insurance company.
Step 6: Make the Premium Amount
Make the payment towards the premium amount via the international mode of payment options provided by the insurance company.
Step 7: Issuance of Policy
Once the submission & verification of documents have been completed, the insurance company will issue the policy document. It will be sent to your registered emailaddress.
Premium Payment Modes for NRIs
Provided are the premium payment options made available for NRIs:
| Payment Method | Details |
| Cheque Payments | Premium amount can be paid by cheques drawn from NRE, NRO, or FCNR accounts. |
| NRE/NRO/FCNR Accounts | Payments can be made through Non-Resident Ordinary (NRO), Non-Resident External (NRE), or Foreign Currency Non-Repatriable (FCNR) accounts through internet banking. |
| Digital Wallets & UPI | Some insurance companies also allow payments through Unified Payments Interface (UPI)& digital wallets for added convenience. |
| International Credit or Debit Cards | Insurance companies may also accept MasterCard, International Visa, &American Express cards for premium payments. |
| SWIFT Transfers | Premium amount can be remitted directly from the foreign bank accounts using SWIFT transfers in various currencies. |
Tax Implications
- According to Section 80C of the Income Tax Act of India, 1961, a deduction of up to INR 1,50,000 can be availed on the premium amount paid towards the term plan.
- The amount of death benefit received by the beneficiaries is totally exempt from tax u/s 10(10D), subject to certain terms & conditions.
- Additionally, if the payouts received are not exempt from tax u/s 10(10D), they will be subject to the tax deducted at source, i.e. TDS. NRIs are eligible to avail of credit for the total tax liability incurred.
How to Claim an NRI Term Insurance in India?
Mentioned are the steps to claim an NRI Term Insurance in India:
Step 1:For instance, inform the insurance company about the death of the policyholder.
Step 2: Complete all the formalities, such as submitting the documents. This includes claim forms, policy documents, medical & death certificates, post-mortem reports, etc.
Step 3: The investigation will be performed by the insurance company, which may take up to 3 months.
Step 4: The insurance company may ask for any additional documents for clarification purposes.
Step 5: The insurance company, after approval, will disburse the claim amount.
Conclusion
A term plan is a very important decision in your life in terms of financial management, as it offers financial security to your family in your absence. A term plan for NRIs provides this security, even if you reside in any other country, away from your family. This helps an NRI remain tension-free in case of any mishap.
Data and information are provided for informational purposes only, and are not intended for investment or other purposes.