We all worry about the financial security of our loved ones while we are away, especially those who are the family’s sole providers. We know that life insurance is the only financial safeguard for our loved ones once we pass away. Because it protects against financial loss in the terrible event that the breadwinner passes away, life insurance is a wise investment.
During the horrifying COVID-19 period, many of us lost family members and friends. Although the threat posed by COVID-19 has decreased, uncertainty in life has not changed. As a result, purchasing a life insurance policy is seen as a critical investment for NRIs, particularly those who live abroad away from their families yet want to maintain the security of their loved ones’ finances even when they are not present.
It had been difficult for NRIs to purchase life insurance coverage. Nevertheless, NRIs can now get life insurance in India thanks to the Foreign Exchange Management Act. Although there are many other kinds of life insurance plans available for NRIs, term insurance, often known as a term plan, is the purest sort because it offers the most protection for the money.
This article explains why NRIs should purchase a term life insurance policy in India.
Learning More About Term Insurance For NRIs
Basic life insurance, or “term life insurance,” offers protection for a predetermined time. Term insurance provides the nominee financial protection in the event of the insured’s passing. The policyholder must pay the premium for the selected term, and the policy may lapse if the payment is not paid on time. Age, the amount assured, and the length of the policy are the main factors affecting the term life insurance premium. The policyholder’s location, health, occupation, personal habits, and medical history are also considered when determining the premium.
No matter where they are staying, NRIs and PIOs (Persons of Indian Origin) are eligible to buy term life insurance or other types of life insurance plans in India under the Foreign Exchange Management Act (FEMA).
The term insurance policy should be tailored to NRIs’ unique requirements because they have diverse financial needs and live worldwide. As a result, most life insurance providers in India provide NRIs with specialized term insurance products. NRIs are free to use an NRE, NRO, or FCNR bank account to pay the policy premiums in Indian Rupee or any other foreign currency specified in the issued life insurance policy.
NRIs can gain from purchasing a term life insurance policy from India in the following ways:
1. Cost-efficient long-term plans:
The main advantage is the cost of purchasing a term insurance plan from India. Compared to India, the term insurance premium in industrialized nations like the USA and Singapore is 40% to 60% higher.
In addition, it could be challenging for NRIs to choose an insurance plan that meets their needs in a foreign country. However, by buying the policy in India, individuals can get life insurance tailored specifically to their needs.
2. The usability of medical examinations:
The NRIs must take a medical exam in their country of residence to purchase an online term life insurance policy from India. The insurance company in India receives the findings of the medical examination and, after analyzing them, decides whether to issue the policy and how much to charge for the premium.
3. Taxation:
You receive many tax benefits from your life insurance policy, another perk of purchasing term insurance in India. Payment of premiums, benefits at maturity, and death benefits are all tax-free under Sections 80C and 10(10D) of the Income Tax Act, subject to certain conditions.
An NRI often has to produce the following documents to purchase term insurance in India:
Form for Application/Proposal
- Passport copy
- Evidence of age
- Income evidence
- Medical record copies
- Reports of medical examinations
- Photograph
- NRIs’ Questionnaire
Along with these documents, you must also pay the initial premium calculation. You can calculate the premium amount you need to pay for the chosen life coverage and plan using a term insurance calculator.
To sum it up:
To safeguard your family’s financial security in the event of your untimely passing, you must get a term life insurance policy. India offers several advantages over purchasing life insurance coverage from outside.
Choosing the best plan, nevertheless, can be difficult due to the abundance of life insurance options. Therefore, it is wise to evaluate various term insurance policies considering several factors, including policy coverage, add-ons, riders, other perks, premiums, claim settlement ratios, ease of purchase and renewal, customer support, corporate reputation, etc. The time you spend selecting the ideal term plan is more valuable than choosing the incorrect policy and then regretting it.
