A term insurance plan can financial protection to the policyholder’s family in case of his/her untimely demise. Furthermore, apart from Indian citizens, Non-Resident Indians (NRIs) can purchase a term insurance plan.
In this article, we will explain 4 things an NRI should keep in mind before purchasing term insurance.
Term insurance is crucial if a person wants to ensure his/her family’s financial security. A term plan can provide a sum assured to the policyholder’s family in case he/she passes away during the tenure of the policy. Therefore, it can help the insured person’s dependants to meet regular expenses and achieve life goals. Apart from Indian citizens, NRIs and Person of Indian Origin (PIOs) can also purchase term insurance.
But before purchasing a term plan, they must keep a few things in mind, such as-
NRIs and PIOs can purchase a term plan if they meet a few requirements. NRIs are Indian residents who have lived abroad for some duration. If a person wants to purchase term insurance for NRI, then he/she must have a valid passport issued by the government of India. PIOs are citizens of any country other than Pakistan or Bangladesh if they meet some eligibility requirements-
- The person has held an Indian passport in the past.
- The person or his/her parents or grandparents were a citizen of India under the Constitution of India or the Citizenship Act, 1955.
- The person is married to an Indian citizen or a person referred to in clauses 1 or 2.
Select the Insurer
Once a person meets the eligibility requirements, he/she must look for a good insurance company. There are many insurance companies. An NRI must keep in mind a few things while selecting an insurance provider, like claim settlement ratio, the reputation of the insurer, the insurance company’s history, etc.
Before purchasing a term plan, an NRI must understand tax implications in India as well as in the country he/she is residing in. He/she must understand taxation at different stages of the policy cycle- investment, accumulation, and maturity.
Select the Mode of Payment
There are different premium payment modes. One is foreign-currency denominated policies in which the person must pay the premiums in foreign currency or via his/her Non-Resident External (NRE) account. The other option is rupee-denominated policies in which the person will have to pay premiums in rupees using a Non-Resident Ordinary (NRO) account.
Benefits of Term Plans
- It Can Provide Financial Security
A term insurance plan can reduce the financial burden on the policyholder’s family. In case the insured person passes away during the tenure of the plan, the insurer can provide a sum assured to the beneficiaries. Hence, ensuring the financial security of the family.
- It Can Help in Meeting Future Goals
Apart from meeting regular expenses with the sum assured, the dependants of the family can also use the funds to pay for future goals.
- It Offers Larger Cover
One of the benefits of a term plan is that it can offer a larger cover compared to other plans.