A Complete Guide for NRIs on Choosing the Right Term Insurance

Term insurance is a valuable financial asset for Non-Resident Indians (NRIs). It ensures the financial security of an NRI policyholder’s family in the event of an unfortunate incident during the policy term.

Term insurance provides essential financial support to your family back in India and allows them to carry on their life with comfort, dignity and independence. Let’s find out more about choosing the right term insurance plan for your needs as an NRI.

Things to look for when buying the right term insurance plan

Here are some things to look for in a term insurance plan:

1. Wide coverage

It is essential to choose a plan that offers wide coverage for NRIs across different countries. This ensures that no matter where you reside, the policy will provide a settlement to your loved ones in your absence.

2. Easy payments

You must look for a plan that allows premium payments from anywhere in the world through online payment options. Additionally, you can opt for a plan with flexible payment schedules, such as annual, semi-annual, quarterly or monthly payments. These can help you adjust the plan to suit your salary schedule.

3. Easy documentation

It is important to opt for a plan with a simplified, digital documentation process that can be completed online. Quick verification and seamless submission of documents will make the process smoother. In such a case, you do not have to physically visit India to buy a plan. Instead, you can buy insurance from your country of residence.

4. High sum assured

If your family relies on your foreign income, which may be higher due to currency conversions, selecting a plan with a higher coverage amount can be helpful. This will ensure that your family can cover their expenses in your absence. Hence, when looking for term insurance, you can shortlist plans that offer a high sum assured at relatively affordable rates to be financially prepared.

5. Additional riders

When selecting a term insurance policy, it is essential to consider additional riders that can enhance your coverage. Many insurance companies offer optional riders, such as an accidental death benefit, which offers an additional payout in case of death due to an accident. Additionally, you can consider a critical illness rider for extra financial assistance if you are diagnosed with a specified critical illness.

Term insurance also offers a waiver for premium rider, which ensures that if the policyholder becomes disabled, all future premiums are waived, and the coverage continues as it is. Lastly, you can consider a terminal illness rider that offers a lump sum payout on being diagnosed with a terminal illness.

Including these riders can significantly boost your policy’s coverage and provide you with greater peace of mind.

Reasons to buy term insurance as an NRI

Here are some reasons why having a term insurance plan is an absolute must for NRIs:

1. Fulfil family responsibilities

One of the primary reasons to buy term insurance as an NRI is to ensure that your family receives the support they need in your absence. Term insurance can help you take care of your financial responsibilities and provide for your loved ones adequately.

2. Tax benefits

Term insurance premiums are eligible for tax deductions under Section 80C of The Income Tax Act, 1961. This can help you reduce your annual taxable income in India and save money every year. Additionally, the death benefit that is given to your beneficiaries is tax-exempt subject to conditions under Section 10(10D).

3. Peace of mind

Working and living in a different country can be financially rewarding, but it often comes with its share of uncertainties. In your absence, your family may face difficulties in maintaining their daily lifestyle. The constant worry about their well-being can also be overwhelming.

Buying term insurance can provide you with a sense of assurance, knowing that your loved ones will be financially safeguarded in case of an unfortunate event.

Conclusion

Term insurance is a necessity for NRIs living away from their loved ones. With streamlined documentation and convenient payment options, buying term insurance is easier than ever before. Do not wait any longer, and take the important step to secure your family’s future.