Financial liabilities in India often continue even when an Indian moves out of the country. Either the parents would depend on them, the children could be pursuing studies in India, or there could be loan payments and property expenses. Term insurance would provide financial assistance to dependents in the event of the insured person’s death during the policy period. NRIs have unique requirements with regard to eligibility, income, health, documentation, and servicing of the policy.
What Makes Insurance Different for NRIs?
NRIs have a different set of circumstances regarding insurance planning. They have financial responsibilities in India and also in the country where they stay. Their income would come from overseas, but dependents, properties, loans, etc., are likely to remain in India. NRIs’ country of residence, profession, and health conditions can play a significant role in their insurance applications. Term insurance provides financial protection to the dependents in case of the insured’s demise. The proper coverage, however, depends on their personal circumstances.
7 Key Considerations for NRIs Before Choosing Term Insurance
1. Determine Your Need for Insurance
The need for term insurance should be determined by considering the financial liabilities that will continue to exist when the insured individual is no longer able to support his/her family. NRIs can consider their income levels, loans, regular family maintenance, future liabilities related to their children, and existing savings to determine their needs.
By evaluating all these factors together, one may have a clearer picture of one’s need for protection than by choosing a cover solely on the basis of its premium rate.
2. Meet the Eligibility Criteria
NRIs are eligible to buy term insurance in India; however, eligibility criteria vary by insurer. Some of the aspects considered under the eligibility criteria include the applicant’s place of residence, age, profession, income, and other personal details.
It is necessary to determine if the insurance policy being considered for is available to the NRIs residing in the said country and what the present eligibility criteria of the insurer are.
3. Consider Your Income From Abroad
Some NRIs earn in foreign currency, whereas their family expenses are incurred in Indian currency. Many NRIs earn in foreign currency, while their families may incur expenses in Indian rupees. This difference should be considered when buying term insurance for NRI while assessing the family’s financial needs.
The NRI can look at current income, expense levels, savings, and financial commitments in the two countries. Such an exercise could help in determining the level of financial support needed by the family and for how long the same needs to be covered.
4. Be Prepared for Medical Underwriting
Medical underwriting is an integral part of taking term insurance. In some cases and depending on the insurance provider and the profile of the individual, medical tests could be conducted before issuing the policy.
NRIs may get this done in their country of residence through the insurance company’s process. The age of the person, health condition, occupation, personal lifestyle and the amount of cover required could also decide the underwriting procedure.
5. Provide Accurate Information
NRIs should ensure they provide all relevant information when applying for term insurance. The information could include health, occupation, lifestyle, income, resident status and other information as per the insurance company’s requirements.
In no case should the NRIs exclude information just because they think it is irrelevant to the insurance.
See also: Commercial Electricians in Shrewsbury: Powering Businesses with Reliability
6. Understand Policy Servicing and Premium Payments
Being out of India can mean that policy servicing becomes a crucial factor in such circumstances. It will be necessary for NRIs to know how premium payments can be made how policy records can be changed and how they can contact the insurance company while staying abroad.
It may also be helpful to inform the insurance company of any changes to contact details or residency status, where necessary. Having policy documents on hand and accessible account details can make future servicing easier for both the insured and the nominee.
7. Keep the Nominee Informed
Purchasing a term insurance plan is the first step. The nominee must also be aware of the policy and the location of all related documents. It is necessary for NRIs to keep their nominee details up-to-date and make sure that the family members know how to contact the insurer in case of making claims.
Planning for What Lies Ahead
As far as an NRI is concerned, term insurance could be seen as an integral part of the family’s financial protection plan as opposed to just another purchase. Incomes might originate from one country, while the dependents, as well as other sources and uses of funds, might be in another. In such a scenario, the insurance plan must take it into account. Taking into account income, financial obligations, current assets, and other family needs will make this decision more realistic. NRIs must go through all the fine print of the policy and know the requirements of the insurance company prior to making the purchase.
