October 14, 2024
Non-resident Indians (NRIs) face unique financial challenges while living and working abroad. One key consideration is ensuring their family’s financial security back home, especially in unforeseen circumstances. After all, by spending so much in pursuit of becoming something, they wish to cement a financial wall to lean on in times of need.
In this context, term insurance for NRIs becomes a vital tool. Offering comprehensive coverage and flexibility, it allows NRIs to secure their loved one’s future by providing a financial safety net. The question is what makes term insurance particularly valuable for NRIs, and how does it differ from the plans available for residents? Let’s explore the significance of term insurance for NRIs , the benefits it offers, and the factors to consider when choosing a plan.
What is Term Insurance for NRIs?
Term insurance for NRIs is similar to a regular life insurance plan. It provides coverage benefits for a specific term or period. If the policyholder passes away during the term, their beneficiaries receive a lump-sum amount, known as the death benefit.
This type of insurance is particularly beneficial for NRIs who want to ensure their family’s financial security without a substantial investment. The primary objective is to offer protection against the uncertainties of life, providing peace of mind to NRIs who may be geographically distant from their families.
Why is Term Insurance Important for NRIs?
For NRIs, managing finances across different countries can be complex. The fluctuating currency exchange rates, varying tax laws, and economic conditions in different countries can pose financial risks. Term insurance for NRIs provides a straightforward and effective way to mitigate these risks.
It ensures that their family is protected financially in their absence, regardless of global market conditions. Additionally, it allows NRIs to maintain financial commitments, such as loans or other debts back home, without putting a strain on their family.
1. Financial Security for the Family
A significant advantage of term insurance for NRIs is the financial security it offers. In case of an unfortunate event, such as the policyholder’s demise, the term insurance plan provides a lump-sum payout to the beneficiaries.
This amount can be used to cover daily expenses, pay off any outstanding debts, or fund significant life events such as children’s education or marriage. This security ensures that the family can maintain their lifestyle and meet financial obligations even in the policyholder’s absence.
2. Flexibility in premium payments
Term insurance for NRIs offers flexibility in premium payment options, catering to their unique financial situations. Most insurance providers allow NRIs to pay premiums in their preferred currency or directly from their foreign bank accounts. This flexibility makes it easier for NRIs to manage their term insurance policies without worrying about currency exchange rates or complex payment processes.
3. Tax benefits in India
NRIs can also enjoy tax benefits on their term insurance premiums as regular policyholders under Section 80C of the Income Tax Act 1961. The assured benefits received by the beneficiaries are typically tax-free under Section 10(10D).
These tax benefits make term insurance an attractive investment option for NRIs looking to optimise their tax liabilities in India while ensuring financial protection for their
families.
4. Coverage worldwide
Another standout feature of term insurance for NRIs is the global coverage it offers. Regardless of where the policyholder resides, the insurance coverage remains intact.
This global reach ensures that NRIs are protected, whether they are working in a high risk job in a foreign country or simply living abroad. It provides peace of mind, knowing that
their family’s financial future is secure, irrespective of their location.
Key Factors to Know About Choosing Term Insurance for NRIs
Any insurance plan is an investment but when you allocate your money for any task, it requires careful assessment and a thoughtful approach. Here are a few things to consider before investing in term insurance for NRIs:
1. Duration of the Coverage
When selecting term insurance for NRIs, consider the duration of the coverage. Most term insurance plans offer flexibility in choosing the policy term, ranging from 5 to 40 years or more.
Choose a term that aligns with your financial goals and the time frame in which you want to provide financial security for your family. The term should ideally cover the years until your significant financial obligations, such as your child’s education or mortgage repayments, are completed.
2. Adequate Sum Assured
The sum assured is the coverage amount the beneficiaries receive in times of misfortune, such as the policyholder’s untimely demise. To determine the right sum assured, consider your family’s current lifestyle, ongoing expenses, future financial goals, and any existing liabilities. Opt for a sum assured that would sufficiently cover all these aspects. It will also ensure the financial security of your loved ones even during the hard times.
3. Claim Settlement Ratio (CSR)
The first thing to know about any insurance company is its claim settlement ratio. It is an indicator of the percentage of claims that the insurer has settled. A higher ratio reflects the insurer’s reliability and customer-centric approach.
When choosing term insurance for NRIs, it is crucial to select a provider with a strong claim settlement ratio. This will play a big role in ensuring that your family faces minimal hassle in receiving the coverage benefit.
4. Additional Riders
Most term insurance plans offer the option to enhance the coverage with additional riders, such as critical illness, accidental death, and disability benefits. These riders provide extra layers of protection tailored to the unique risks that NRIs might face. For instance, a critical illness rider can cover the costs of major health issues. Now, combining the comprehensive coverage benefit with existing term insurance for NRIs is especially
beneficial if you reside in a country with high medical expenses.
Protect Your Future From Overseas Today!
Term insurance for NRIs is an essential tool for securing your family’s financial future while living abroad. It offers benefits such as financial security, tax advantages, and global coverage. When selecting a plan, consider all factors with careful assessment as it helps you choose the best option for your unique needs.
Here, Tata AIA can be one of the best insurers to opt for. Their term insurance solutions, tailored for NRIs, provide strong financial backing to rely on. Coupled with their reputation over the years in the insurance industry, you can study abroad peacefully.
Explore Tata AIA’s term insurance for NRIs today