A life insurance plan for NRIs is a financial plan that offers financial security to Indian citizens residing outside India. This plan offers a death benefit to the policyholder’s family members in case of their demise. The premium can be paid either in Indian or foreign currency, depending on the source of payment. This plan secures NRIs & their family members during all financial hardships by providing a huge range of flexible life insurance plans, helping to achieve financial objectives.
Who can buy a Life Insurance Plan in India?
The following is the list of individuals who can buy a life insurance plan in India:
i. Non-Resident Indians (NRIs)
They are Indian citizens who live abroad for education or work purposes & qualify as NRIs if they reside for more than 182 days or more in the previous financial year.
ii. Persons of Indian Origin (PIOs)
- Any person of full age & capacity, who is a citizen of another country but was a citizen of India at the time of, or at any time after the commencement of the Constitution, or who is a citizen of another country but was eligible to become a citizen of India at the time of the commencement of the Constitution, or who is a citizen of another country but belonged to a territory that became part of India after the 15th day of August 1947, or who is a child or a grandchild, or a great-grandchild of such a citizen, or
(b) A person who is a minor child of a person as mentioned in point (a) or
(c) A person who is a minor child whose any one or both of the parents are Indian citizens or
(d) Spouse of foreign origin of a citizen of India or spouse of foreign origin of an Overseas Citizen of India Cardholder registered under section 7A.
iii. Foreign Nationals
They are citizens of some other countries residing in India, i.e. an individual who is not an Indian citizen, i.e. they do not hold the nationality of India.
Reasons to Buy Life Insurance for NRI
The following are the reasons to buy Life Insurance for NRI:
The life insurance plan for NRIs is quite cheaper in comparison to international plans.
- Hassle-Free Medical Tests
These plans can be bought online after getting the medical tests done via telephonic or video consultations.
- 24/7 Worldwide Claim Assistance
This insurance offers worldwide coverage with 24*7 customer support, providing claim assistance from any corner of the world.
- No Out-of-Pocket Medical Costs
The cost of medical tests for NRIs is borne by the insurance companies, unlike international companies.
NRIs can avail a pre-approved life insurance coverage of up to INR 2 crore without any medical tests, which makes the process easy, quick, & hassle-free.
The insurance companies are managed by the Insurance Regulatory & Development Authority of India (IRDAI), which provides multiple insurance plans for NRIs.
- High Claim Settlement Ratio
An NRI can select an insurance company with a claim settlement ratio of more than 95% according to the CSR reports, ensuring the timely settlement of claims.
There is no need to deal with the insurance companies’ offices abroad. This means the claim settlement can be done here in India at the insurance companies’ offices.
Factors to be considered while buying a Life Insurance Plan for NRIs
One should consider the following factors while buying a life insurance plan for NRIs:
- Currency of Premium Payment
Always review the currency provisions before investing in a Long-term investment plan or purchasing a life insurance plan for an NRI.
One should understand the process of transfer of proceeds from the policy to a foreign account, which ensures easy access to the funds outside India.
The premium paid towards the plan is eligible for tax deduction u/s 80c of the Income Tax Act, 1961. Additionally, the maturity proceeds & death benefits are exempt from tax u/s 10(10D) of the Income Tax Act, 1961.
The amount of sum assured should be such that it aligns well with the family’s requirements. The premium amount may vary depending on the age, coverage amount, policy tenure, etc.
One can opt for riders, such as accidental death cover, critical illness, etc., to enhance the current plan at an added cost. The choice of riders will depend on the financial requirements of an individual.
Some of the plans provide an option of flexible payouts or additional top-up premiums. This lets a policyholder adjust the investment amount according to the future financial objectives.
- Exclusions & Policy rules
Look for the items that are excluded, like non-payment, suicidal cases, or any specific health issue, which are not covered under the plan.
Benefits of Life Insurance for NRIs
Provided are the benefits of Life Insurance for NRIs:
- Adequate Financial Coverage
This plan provides financial protection to the policyholder’s family members in case of their sudden demise. The cash value or protection plans offer a death benefit payout, covering the financial requirements of the family, which can be used to maintain the livelihood of the family members in the absence of the sole breadwinner.
The survival or maturity benefits help secure a retirement life, achieve financial goals, & beat the effects of inflation.
This plan helps the family members in repaying the outstanding debts after the policyholder’s sudden demise, removing the burden from the shoulders of family members.
This plan allows creation of wealth using the cash value factor to fulfil the needs during post-retirement tenure, beat inflation, or any other financial objective.
The premium paid towards the life insurance plan is eligible for a tax deduction of up to INR 1.5 lakhs u/s 80C of the Income Tax Act, 1961. The death benefits received are exempt from tax u/s 10(10D) of the Income Tax Act, 1961.
Conclusion
The life insurance plan for NRIs allows policyholders to build corpus funds, providing life coverage with assured returns, hence protecting their family members in case of sudden demise. Whether an NRI opts for a pure life cover or wealth creation life insurance offers flexibility. It secures the financial future of your family members by letting you choose an appropriate plan, ensuring timely payments of premiums along with tax benefits.
