The term insurance benefits are plenty, offering monetary security to the nominees if something unfortunate happens to the policyholder. This is why term life insurance plans have become popular among Indians and Non-Resident Indians (NRIs) alike. However, the procedure to apply for a term policy for NRIs is different from residing Indians.
Read on to know how to opt for a term plan as an NRI.
Process to get a term policy for NRIs
There are two ways you can invest in a term plan in India as an NRI:
If you are currently residing in any other country, you have to purchase the policy via a Mail Order Business. To complete the formalities, a diplomat from India, a notary, and an Indian embassy official must verify the term plan. If you are an NRI student, a supervisor or the dean of your institute can help you with the verification.
However, the simplest process to buy the term insurance plans in India is to do it when you are visiting the country. When in India, you can purchase a term policy the same way a residing Indian can. In this scenario, insurance companies treat the process as a regular purchase.
If you are an NRI, insurance companies ask you to submit or upload certain documents to process your application. These include:
- Passport copy (attested)
- Health condition report
- Income proof
- Age proof
- Proposal form
- Application amounting to the first premium
If you are using a Mail Order Business to purchase the term policy, the insurance company may ask for other documents, which may vary among insurers. While applying for the policy as an NRI, remember that your insurance provider may decide the sum assured and premium depending on your income, job type, and the country you are currently residing in.
Before buying the term insurance policy as an NRI, there are a few other things that you need to keep in mind. These include:
- Check for eligibility
You have to meet certain conditions to be eligible for buying a term policy as an NRI. These include:
- You have held an Indian passport in the past
- You or either of your grandparents or parents were an Indian citizen by the virtue of the Citizenship Act, 1955 or the Constitution of India
- You are married to a citizen of India or any individual who meets the above two points
- Know about the taxes
When you buy a term policy as an NRI, remember that the tax regulation of both India and your country of residence apply to the death benefit. Section 80C and Section 10 (10D) of the Income Tax Act, 1961 allow tax exemption on the premium paid and the death benefit. However, your country may have different tax implications. Find out about them in detail before opting for the term plan.
- Determine the premium payment mode
The term policy premium payment method depends on the type of currency account you have. You can pay through two different modes:
- Using Non-Resident Ordinary (NRO) account to pay in rupees
- Using Foreign Currency Non-Resident (FCNR) or Non-Resident External (NRE) account to pay in foreign currency
- Undergo health checkups
You need to submit a health condition report to the insurer before purchasing a term policy. You can send the reports to the insurance company from your country of residence by paying the expenses from your pocket. You can also come to India for medical tests, wherein the insurer pays the costs.
With term insurance benefits like low premium and high sum assured, it is natural if you want to buy the policy from India. Make sure to thoroughly read the insurer’s policy terms and learn all the necessary information regarding NRIs purchasing term plan from India. Doing this will ensure that you have a hassle-free procedure.