Term Insurance for NRI - A Detailed Guide

The love that you share for your home and homeland is unmatched. On top of that, living far away from your family and country can make you want to be there for them when they need you the most. Term Life Insurance for NRI is one such way to take care of your near and dear ones even when you are not around. It is the key to ensuring your loved ones are protected in times of uncertainty, in times when you are not around

In this comprehensive guide, we will delve into the world of term insurance specifically tailored for NRI's, shedding light on its benefits, features, and why it is a must to have in your financial portfolio. So, fasten your seatbelts as we embark on a journey toward financial peace of mind for you and your family.

Let's get started!

Can NRIs Purchase Term Life Insurance In India?

In today's interconnected world, geographical boundaries are no longer a barrier when it comes to purchasing term life insurance. Gone are the days when Non-Resident Indians (NRIs) faced difficulties in securing insurance coverage in their home country. With advancements in technology and the growing global market, NRIs can now easily buy term life insurance in India.

Term plan for NRI offers financial protection to individuals and their families by providing a fixed sum assured in the event of the insured's death during the specified term. It is an essential tool for ensuring financial security and peace of mind.

Reasons Why NRIs Can Consider Purchasing Term Life Insurance In India

One of the key advantages of purchasing a term insurance plan for NRI in India is that it allows individuals to protect their loved ones back home financially. Whether you reside abroad temporarily or have settled permanently, having a term life insurance policy ensures that your family is taken care of even if you are not physically present.

Here are some of the key reasons why:

• Being the only earning member in your family, it is crucial to ensure their financial security and protect their future in case of any unfortunate event.
• In the event of your unexpected demise during the policy period, the claim amount from the term insurance policy can help your family deal with short-term expenses like grocery, utility bills, rent, etc, and long-term dreams, such as education or marriage expenses.
• If you have any unfinished loans or liabilities, the payout from the term insurance policy can help alleviate these burdens for your family members.
• It offers peace of mind knowing that even if you are not physically present, your loved ones will have financial stability during challenging times.

How Does Term Life Insurance For NRI Work?

By purchasing term insurance for NRI in India, you are taking a proactive step towards securing your family's future and ensuring that they are well-protected financially.

Term plan for NRIs is a straightforward and convenient product that provides the easiest way to protect your loved ones. The concept behind term life insurance is simple - if you pass away while the policy is active, the insurance company will pay a predetermined sum of money, known as the 'sum assured', to your family.

This sum of money can help replace your income and provide financial stability during a difficult time. Term life insurance is designed as a pure risk cover, meaning it does not offer any savings or investment components. Its primary purpose is to provide protection against the risk of premature death, ensuring that your family's financial needs are taken care of even in your absence.

Here are some of the key aspects to be aware of:

◆ Documents required If you are investing in a term insurance plan in India as an NRI, you will have to submit the following documents to the insurance company -

• Duly filled application form
• Attested copy of passport
• Medical tests and reports
• Age proof certificate
• Income proof papers
• Any other documents requested by the insurer

◆ Premium payment Insurance companies in India provide various options for NRIs to pay premiums for term insurance policies. These premiums can be paid through different accounts such as -

• Non-resident Ordinary (NRO) account,
• Non-resident External (NRE) bank account, or
• Foreign Currency Non-Repatriable (FCNR) account. It is important for NRIs to verify the currency in which the policy is issued.
  ➔ If it is issued in a foreign currency, you will need to pay the associated premiums in the same currency via your NRE/FCNR account.
  ➔ If it is issued in INR, you will need to pay the associated premiums via a NRO account.
  

◆ Payout made The benefits that your nominee will receive from the term insurance plan in case of your demise during the policy term will be payable in the currency that the policy document specifies. It can either be in INR or any foreign currency. Your nominee will need to submit the required documents, like original policy document, death certificate of the insured, the nominee’s identity documents, etc., to the insurance company to get the claim amount.

◆ Tax implications Insurance companies may deposit the claim amount in an NRE (Non-resident External) account if the insured NRI passes away during the policy period. However, it is important to be aware of the fact that the country you live in may tax these insurance proceeds. Make sure your nominee is informed about this, so they can inquire about the taxation aspect.

If you, as an NRI, file taxes in India, tax benefits^$ are available for both the term insurance premiums and claim amount under the Income Tax Act of India, 1961.

• Premiums come with tax advantages under Section 80C. You can claim a maximum deduction of up to Rs 1,50,000.
• The claim amount that the nominee will receive if you pass away during the policy term will also be completely tax-exempt as per Section 10(10D)^.

◆ Worldwide Death Cover With term insurance purchased in India, you can have peace of mind knowing that your loved ones will be financially protected in the event of your passing, regardless of where it occurs. This comprehensive coverage extends to all types of death, except for suicide within the first year of purchasing the policy. In such unfortunate circumstances, the insurer will return the premium paid to your nominee. So, whether you pass away during the policy term in the United States, UAE, or any other country, your family will still receive the money they deserve.

◆ Protection under Section 45 Section 45 of the Indian Insurance Act, of 1938 provides a significant advantage for individuals considering term insurance in India. According to this provision, if a life insurance policy has been in force for three consecutive years, an insurance company is legally prohibited from investigating or rejecting a death claim on any grounds whatsoever. This means that if an NRI's death occurs after three years of the policy being active (and within the policy period), their family is practically guaranteed^# a payout. This makes term insurance in India an excellent investment option for NRIs looking to secure their family's financial future.

Wondering About The Best Term Insurance Plan For NRI?

If you’re looking for online term insurance for NRI, we’ve got your back! The ABSLI DigiShield Plan [UIN: 109N108V11] is the perfect choice for anyone wanting to create a secure financial cushion for their loved ones. You can customise how the claim amount will be paid out to your family and also add riders to your base plan to expand its coverage. The plan comes with features like life stage protection, increasing cover, sum assured reduction, etc.

Wrapping Up

Term insurance for NRIs is a crucial financial tool that provides protection and peace of mind to individuals living abroad. It offers comprehensive coverage at affordable premiums, ensuring that your loved ones are financially secure in your absence. With its flexible options and tax benefits^$, term insurance is a smart investment for NRIs looking to safeguard their family's future.

Product Disclaimer ABSLI DigiShield Plan [UIN: 109N108V11] is a Non-Linked Non-Participating Individual, Life, Pure Risk Premium Term Insurance Plan.