Term Insurance For Millennials Living In Abroad

When it comes to financial security, taking risks just isn't an option, especially if you're an NRI carving out a life in a new country. Let's look at the story of Rajesh, an IT professional working his magic in Canada. Rajesh was generally on top of his finances; however, purchasing a term insurance policy from India was simply one more thing on his agenda — or so he thought. Quick forward to a tragic misfortune: Rajesh's untimely demise in a road accident. Amidst the chaos, his Indian term insurance policy turned into the family's anchor.

The claims process? Smooth as butter.

The payout? A lifesaver.

Rajesh’s foresight? Nothing short of a blessing.

For millennials who are globe-trotting and carving out their careers abroad, term insurance isn't simply a 'good-to-have'; it's a financial need. It's tied in with shielding your hard-earned financial stability and guaranteeing# your dearest ones aren't abandoned. With the world shrinking into a global village, NRIs should consider powerful term insurance to cover all their bases.

In this piece, we'll jump into the fundamentals of term insurance for millennials, unwinding why it's an unquestionable necessity for NRIs.

Let’s get into it and ensure you're covered regardless of where life's experiences take you.

Key Points For Term Insurance Coverage Outside India

Here are the key considerations while purchasing term insurance for millennials outside India -

1. Eligibility
Did you know most Indian insurers offer term plans to NRIs? But each one has its own rules—age limits, how much coverage you can get, and even preferred countries of residence. So, if you're an NRI looking for term insurance in India, check those details first. Make sure you fit their age criteria, understand the maximum and minimum sum assured limits, see if your country is on their list, etc. Matching their requirements to your needs is key to getting the right insurance hassle-free.

2. Validity
You know, if you buy a term insurance policy in India and then move abroad, it still stays valid. So, if something happens to you while the policy's active, your loved ones get the payout. Just remember, to keep it going, you must continue to pay those premiums to the insurer. It's about keeping that safety net intact, no matter where life takes you.

3. Premium Payment
In India, insurance companies offer different ways for NRIs to pay premiums for their term insurance policies. They can handle it by -
a. Non-resident ordinary nature account (NRO)
b. Non-resident external bank account (NRE)
c. Foreign currency non-repatriable account (FCNR)

NRIs must verify the currency used to issue the policy. If an NRI picks up a term insurance policy issued in a foreign currency, they've got to pay the premiums using an NRE or FCNR account in that same foreign currency. But, if the policy is in Indian rupees, then it’s a different ball game – they’ll need to pay up through an NRO account. It’s all about keeping things straightforward and ensuring the payments match up with the currency in which the policy was issued.

4. Payout By The Term Insurance Plan
Here's how things are: just like how premiums are paid according to the currency of the policy, the benefits from term insurance for millennials are also paid out in the same currency mentioned in the policy document—either in rupees or in foreign currency. When it comes to claiming those benefits, your nominees simply have to follow the policy terms and present the required documents.

Now, with regard to making a claim, the insurance company generally needs a few key documents. Most importantly, they'll probably request the original policy document, some ID proof of the nominee, the death certificate of the insured person, etc., to affirm everything.

5. Tax Implications
If an NRI passes away while their insurance policy is still active, most insurance companies will deposit the claim amount into their NRE (Non-Resident External) account. However, depending on the country where the NRI resides, taxes might be taxes imposed on this payout. Also, filing the claim involves an added layer of paperwork and tax considerations.

So, the NRI should definitely tell their nominee to check if there are any taxes on the insurance payout. Additionally, assuming that the NRI is filing taxes in India, there are some tax benefits* they can get for both the premiums they paid and the claim amount the nominee receives under the Income Tax Act of India, 1961.

a. Under Section 80C, the premiums paid for term insurance will be tax deductible, with a maximum deduction of Rs 1,50,000 accessible to NRIs.
b. Also, under Section 10 (10D)**, the nominee's portion of the payout from the term insurance policy if the NRI passes away during the policy's term will be completely exempt from tax.

6. Global Coverage Of Death
Except for suicide within the first year of buying the policy, term insurance you get in India covers all kinds of death no matter where it happens globally. If, unfortunately, there's a suicide in that first year, the insurer will refund the premiums to the nominee.

So, if you get a policy in India and something happens to you in Singapore, Canada, or anywhere else in the world, your family will, in any case, get the claim. You will get immense peace of mind regardless of where life takes you, and your dearest ones will be covered.

7. Protection Under Section 45
Section 45 of the Insurance Act 1938 in India says that once you've had a life insurance policy for three years with practically no breaks, the insurance agency can't simply deny your family's claim under any condition.

So, if you're an NRI looking into term insurance in India, it's actually a solid choice. It ensures a payout to the NRI's family if the policy has been active for at least three years and the NRI passes away within the policy term.

So, how can term insurance be a unique advantage for NRI millennials? Let's dive into the essentials that make it a must-have for those living abroad!

Features Of Term Insurance For Millennials Living In Abroad

Here are the standout features of term insurance for millennials residing abroad -

1. Pure Protection, Reasonably Priced Premiums
Term insurance is like the no-frills option of life insurance—it gives you direct coverage without the fancy odds and ends. It's ideally suited for millennials who need to guarantee# their loved ones are financially secure if something happens but without tying up their money in complex investment plans.

2. Flexible Premium Payment Options
Term insurance plans provide you with a ton of choices and adaptability in how premiums can be paid. You can choose to pay yearly, semi-yearly, quarterly, or even month-to-month. Along these lines, you can change your payments based on how your finances are flowing at any given time.

3. Add-Ons And Riders
Millennials can truly amplify their term insurance plans by adding additional coverage for critical illnesses, accidental deaths, disability, etc. These add-ons give you a more extensive safety net, especially if you're living abroad and want to cover all your bases.

4. Online Management Of Policies
Most insurance companies these days have really slick online systems where NRIs can handle everything from updating their information to paying premiums and checking how their policy is doing. It's super handy, especially when you're living halfway across the globe!

Curious about the nitty-gritty of documentation for term insurance as an NRI? Here’s the scoop on the essential documents you’ll need to send in to seal the deal!

Documentation For A Term Insurance Policy For Millennials

If you're getting term insurance from India as an NRI, you'll need to send over a few documents to the insurance company. These are -

• Duly filled application form
• Attested passport copy
• Medical reports and tests
• Certificate of age proof
• Income proof papers
• Any additional records that the insurer requests

However, note that this is only an indicative list.

In Conclusion,

Term insurance is like a superhero cape for millennials living abroad. It's reasonable, adaptable, and accompanies add-ons that cover everything from critical illnesses to accidental mishaps. Plus, managing your policy online is a breeze, regardless of where you are. So, assuming you're a NRI, ensure you get the full scoop on eligibility, payments, etc. Your family's financial future is worth the effort! Bounce on the term insurance train today and give your family the peace of mind they deserve. It might be a small step for you but a giant leap for their security!