If there is one commonality between Indian citizens and their overseas counterparts, i.e. non-resident Indians (NRIs), it is their firm belief in robust financial planning. The second one is – the idea of securing their family against unforeseen future events. Thus, if you are an NRI looking to invest for a financially secure future for your loved ones, the policy that should undoubtedly be on your portfolio is a term insurance plan. This pure-risk, straightforward plan safeguards one’s family in case of the policyholder’s unfortunate demise.
While as an NRI, you would have a choice to purchase a plan from your country of residence, investing in a term insurance policy from India is a better option for several reasons. Here’s evaluating how buying a term plan from India differs from that of your host country and what you should opt for -
Affordable life cover
Investing in a term insurance plan from India is wiser for NRIs, as these plans offer policyholders better coverage at reasonable premiums. It also has a considerable cost difference of at least 50% to 60% compared to developed nations. For instance, a term insurance policy purchased from the UAE or Singapore costs 40–50% higher than in Indian markets. This is due to an additional GST benefit of up to 18% and relatively lower reinsurance rates. One more advantage is the currency conversion rates, i.e. you can pay the premium
in INR, which further brings down the overall cost, especially if the conversion rate in your country works in your favour.
Customisable
The insurance industry in India provides term insurance plans for NRIs that are customised as per the needs of Indian consumers. Additionally, it offers riders such as critical illness and medical care in the place of origin, making the term plan from India more robust and a better choice for meeting the requirements of overseas residents. It also helps in an easier claim procedure, which is paramount for the insured in the event of their unfortunate death, as the intention is to ease the process for their loved ones who may be living in India. Hence, NRIs with family members back home should consider buying the plan from India.
Easy accessibility
Covid-19 made way for stricter underwriting norms which included mandating physical presence for medical check-ups before buying term insurance. However, with greater flexibility, NRIs can now purchase term insurance online from anywhere, with the introduction of telemedical check-ups. This development contrasts the earlier situation of pushing back this otherwise crucial decision until their subsequent India trip. But with
telemedical examinations, video verification and e-KYC regulations, acquiring this policy from India has become effortless. The procedure is simple - fill out the application form from your preferred insurer and complete the payment using hassle-free modes like internet banking or other domestic or foreign cards/accounts. Post this, the insurance provider arranges for a video or telemedical examination. The process for telemedical insurance includes tele-underwriting, where a licenced physician from the insurance company calls the customer to learn about their medical history and current health.
These are based on the disclosure of the prospective policyholder’s medical history and the documentation shared about any chronic illnesses and pre-existing conditions. The doctor then asks pertinent questions to gauge their health and lifestyle choices. The potential buyer must provide truthful information and declare any health issues via phone or video, or it can lead to problems during claim settlement. Once the medic is satisfied with the response and offers a clear signal, the application gets accepted for issuance.
Insurance companies have also begun tying-up with local agencies to provide home visits in case of a medical check-up to provide a hassle-free experience to customers. This becomes helpful in case the tele-medic feels that a further evaluation is required. It is clear that insurance companies consider NRIs as a valuable customer base, and are investing to ensure that they are able to provide adequate coverage and seamless experience to NRIs too.
To conclude, for NRIs, a term insurance policy offers many benefits at an affordable price. It also provides tax deductions of up to Rs 1.5 lakhs per annum on the premium paid towards term life insurance under Section 80C, and the death benefit paid to the nominee is tax-free under Section 10(10D) of the Income Tax Act. So, weigh the available policies online and read the fine print carefully.
(The author heads Term Life Insurance at Policybazaar.com)