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Term insurance is insurance that pays out on the death of a policyholder during the policy term. If the policyholder survives the term, the insurance does not have a maturity value. This keeps premiums for term insurance extremely low compared with other types of insurance policies. Anyone whose family is financially dependent on them can benefit from buying term insurance.

Non-resident Indians (NRIs) and persons of Indian origin (PIOs) can also buy these policies in India. Vinay Taluja, chief product officer, Bajaj Capital, said, “The Foreign Exchange Management Act has made it possible for NRIs and PIOs to get term insurance in India." Also, an NRI doesn’t need to be present in India when he/she buys term insurance.

Rakesh Goyal, director, Probus Insurance, said it is always better to buy when NRIs are in India. However, they can also buy term policies when they are in a foreign country.

“There are two points policyholders must keep in mind while paying premiums. Suppose the policy is issued to NRIs in foreign currency, they will have to pay premiums from a non-residential external (NRE), or foreign currency non-resident (FCNR) account held in India. But if the term insurance policy is issued in Indian currency, premiums can be paid through non-resident ordinary (NRO) account," said Goyal.

Payment of life insurance premium is tax deductible under Section 80 C if the sum assured is at least 10 times the annual premium. In general, term insurance policies fulfil this requirement.

Hence, an NRI with tax liability in India can also benefit from the tax deduction on insurance premium and claim the same in his or her returns.

Further, the premiums can vary from one country to another. If the NRI is staying in a country where life risks are higher, or the country is more prone to civil issues and has an unstable government, premiums of those countries would be higher compared with other low-risk countries.

Ways to buy

When NRIs visit India, they can easily purchase term insurance. In a scenario where an NRI visits India at least once or twice a year, they are most likely to do so. However, those who are unable to purchase a policy while visiting India can do it online. All that is required is to fill out an online application for the term insurance of one’s choice.

The documents required for NRIs to purchase term insurance are an application form, a copy of passport (attested), and documents specifying the health conditions/check-up reports, age proof certificate and income proof papers.

After filling the proposal/application form and paying the premium online, the insurer may request a telemedical or physical exam based on your medical history, in addition to the required documentation. The insurer may consider the country you live in while processing your application. If everything is in order, the application is accepted, and a policy is issued to the buyer.

Death benefit

The process is simple as the nominee needs to submit necessary documents as per the policy terms. Once the claim documents are filed in India, the insurer processes the claim irrespective of the country of death. Goyal said, “If policyholder bought a policy in India, the claim would be payable in rupees and if bought from a foreign country, the proceeds would be paid in foreign currency."

Adding to it, Rushabh Gandhi, deputy CEO, IndiaFirst Life Insurance Co. Ltd, said, “Fulfilment of claim process for nominees (if they are residing in India) becomes easier for an Indian insurance policy. Further, the death benefit paid to a nominee continues to be tax-free in India."

Reasons to purchase

If you are an NRI looking to purchase protection/term insurance in India, you have various choices to select from.

Sajja Praveen Chowdary, head, term life insurance, Policybazaar.com, said, “In reality, compared with other countries, India’s term insurance policy prices are far lower. Another key reason for those living outside of India to get term insurance in India is that their family/nominees may live in India or may relocate to India in the future. If anything unfortunate were to happen to them, their family in India would be put under a lot of mental and financial strain. “

“When an NRI buys a term life insurance in India, they have faith and trust that the insurer would be available in their home country and that their family will be able to handle the claim processes there," he added.

Echoing similar views, Taluja said, “If you are an NRI and reside outside India, it is important for you to buy term insurance in India at the earliest, as the prices of term insurance policies in India are the cheapest across all other countries. Further, it is also essential to recognize that the loss of the family’s breadwinner can be a severe setback for the dependents. Therefore, an NRI must help them stay covered by buying term insurance in India."

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