Life is a unique blend of moments packed with uplifting joys and humbling sorrows. Term insurance is a financial tool that helps bear the burden of sorrows. A term plan ensures that your efforts to design a comfortable life for your loved ones are not foiled in your absence.
Inadequate financial literacy veils the features and characteristics of term life insurance and create misunderstandings such as NRIs (Non-Resident Indians) cannot buy term insurance. In reality, not only are NRIs are eligible to buy term insurance, but insurance companies have designed unique features that specifically cater to their needs.
What is a Term Plan?
Whether you are in India or are earning a fortune for your loved ones overseas, term insurance helps you secure your finances should the unfortunate befall. In its simplest definition, a term life insurance policy protects for a specified duration, hence the name.
One of the biggest benefits of term insurance is that it provides a large financial cover for a reasonable term insurance premium. The premium can be calculated using a term insurance calculator that usually asks you to input your age and the cover needed.
To further bring down the cost of your term life insurance policy, it is recommended to search for term insurance online. This would also enable you to compare term insurance plans to find the most suitable one.
Procedure for NRIs to Procure Term Insurance
When you buy term insurance, you secure the financial future of your family to ensure that inadequate finances don’t dampen their prospects at life. Several people find it prudent to invest in multiple life insurance policies. NRIs might worry about the financial security of their loved one back home, and so they can buy term insurance online or during their next visit to India.
Here are the two possibilities for NRIs to buy term life insurance:
1. A term plan can be purchased during their next visit to India. Upon completion of the underwriting formalities, the term life insurance is awarded equal status to that of any term insurance purchased by an Indian citizen. Every insurance seeker must be completely transparent during the underwriting process to ensure a seamless claim settlement of the policy.
2. If a visit is not possible in the immediate future, then NRIs also have the option to buy term insurance in the country they are currently residing in through Mail Order Business. A notary, an Indian diplomat, and an official from the Indian Embassy need to verify the term insurance policy. If you are a student, then the dean or the supervisor can be approached for verification.
Features of NRI Term Insurance Policy
Generally, the policy tenure for an NRI ranges between 6 months to 25 years. Another specification to procure a term plan is that the individual must at least be 18 years of age. The maximum age to enter the policy can vary depending on the insurance provider. Usually, depending on the conditions stated in the term life insurance policy, the maximum age is 55 to 60 years. Enlisted are some of the features of a term plan policy for NRIs.
· Term Insurance Premium and the Sum Assured: The death benefit offered for an NRI term plan can range from a minimum of ₹2 lakhs to a maximum of ₹1 crore. The sum assured can also depend on the type of job, place of residence, and the policyholder’s income.
The term insurance premium payable relies on the following factors:
o Tenure of the term insurance
o Sum assured
o Frequency of term insurance payment. Policyholders have the option to make premium payments monthly, quarterly, half-yearly, or annually.
o Choice of riders to enhance the policy
The premium amount payable can be calculated using a term insurance calculator that is available for free online. In the unfortunate event of the insured member’s demise, the death benefit is paid to the nominee in the NRE account.
· The Saving Grace: The failure to pay the term insurance premium can result in a lapse of coverage. However, insurance providers have introduced a premium payment feature called the grace period that extends the premium payment period. If the policyholder manages to make the payment during this extension, then the policy does not lapse. Usually, the grace period is 15 days.
· Renewal of the Term Plan: At the time of maturity of your term plan, there is an option for renewal. During renewal, the insurance seeker is expected to complete a medical test to determine the revised premium amount. Usually, the premium amount is higher at the time of policy renewal. Delays made in payment dues are also a factor determining the policy premium.
· Online Premium Payment: NRIs can avail themselves of internet banking services to make the term plan payments. A prerequisite for this service is that the policyholder has an authorised bank account permitting electronic transactions to the insurance provider. It is advisable to be aware of the associated terms and conditions to make timely payments and prevent lapses. Some of the options include foreign currency remittance, NRO bank account, NRE/FCNR bank account.
· Documents Needed: Mentioned below are the required documents that NRIs will have to keep handy to procure term insurance:-
o Form of proposal
o Age proof and income proof
o Medical report
o Attested copy of the passport
o Application amount equivalent to the first premium payable
Aside from the aforementioned, some additional documents might be required if the insurance is being purchased via Mail Order Business.
The Edelweiss Tokio term plan is available for NRIs and promises to take care of their loved ones just as they themselves would. Its customisable offerings allow freedom to choose the policy term, premium paying term and frequency, and pay-out mode. Policyholders can even strengthen their policy by choosing from amongst the four rider options.
Edelweiss Tokio Life offers attractive term life insurance to NRIs. With the looming threat of the virus, the world has witnessed a revived importance of purchasing term insurance. Characterised with flexible terms and extensive benefits, term life insurance is a must for a steady financial future.