Non-resident Indians (NRIs), who want to ensure financial stability of their families in their absence, can now easily buy a term insurance policy as the process to obtain the cover has been made easier. Advanced processes like telemedical check-ups coupled with the existing process-driven improvements across the sector like video verification and eKYC have removed the need for physical presence as a prerequisite. These relaxation in processes will improve the ease of buying protection products for NRIs.
India offers among the lowest premium rates among emerging and developed economies, which makes for a compelling value proposition for customers. Rakesh Goyal, director, Probus Insurance Broker, says while there are multiple benefits for NRIs in taking a term plan, one of the biggest is the lower premiums in India. “Compared to paying a premium for term plans taken from other countries, it is cheaper by at least 40-50%. Other benefits include terminal illness coverage,” he says.
Once the form is filled online by an NRI, the insurer will fix a telemedical check-up to be done by a doctor empanelled by the insurance company to understand the prospective policyholder’s current medical history. If the insurer insists on a medical examination, then the prospective policyholder will have to get it done at his own expense. The insurer will require a copy of passport, age and income proofs and documents specifying the health conditions.
The individual must share all the required information so that if there is death during the term of the policy the nominee can get the claims without any hassles. Also, as per regulatory norms all life insurers will have to mandatorily pay all claims made three years after the date of commencement of a policy.
Flexible terms and conditions
Life cover for NRIs has flexible terms and conditions and the coverage amount varies from one insurance company to another. In genera, the premium asked by insurers for the NRI term plan is between Rs 1 crore to Rs 2 crore. Anup Seth, chief distribution officer, Edelweiss Tokio Life Insurance, says premium will depend on the choice of policy, frequency of premium paying term, policy term, health status, etc. “Premium payable by an NRI can differ depending on the macroeconomic conditions of the country of their current residence. For instance, in case you reside in a country with high political instability, your premium rates are likely to be higher,” he says.
To purchase a term plan, the NRI should be minimum 18 years old and not above 60. Insurers offer policy terms of 20 to 25 years. As the premium paid will be lower, NRIs can opt for various riders along with their term life insurance plan at an affordable price. It is better to opt for a cover that increases the sum insured by a certain percentage every few years or a policy that increases the sum insured at every crucial life moment. An NRI can also opt for multiple plans for enhanced protection.
What to check before buying the cover
NRIs will have to pay premiums through NRE account, if the policy is bought in foreign currency. They can also use foreign currency through NRO, NRE/FCNR bank accounts to make periodic premium payments. One must also check the eligibility criteria as Indian insurers cannot offer products and services to individuals residing in certain countries.
It is also important to check for tax implications at all three stages of the policy life cycle purchase, premium payment, growth and maturity. Seth says NRIs have to pay tax on income generated abroad and need to be mindful of the tax provisions in the country of their residence.
MAKING IT EASY
*Telemedical check-ups, video verification, eKYC have removed the need to be physically present in India to buy insurance
*NRIs can pay premium through NRE account, if the policy is bought in foreign currency