NRIs are citizens of India who are temporarily living in India, having a valid government-issued Indian passport. Also, citizens who reside abroad on a Visa for employment or business purposes are also known as NRIs. The investment plans for NRIs include Mutual Funds, Retirement Plans, NPS, ULIPs, Real Estate, equity, etc. Also, some plans offer tax-free investment options, which help increase wealth.
Life Insurance is a contract signed between an individual & a life insurance company. It involves the policyholder paying a specific amount of premium at fixed intervals of time. Thereafter, the insurance company is required to pay the beneficiaries the amount insured on the occurrence of a certain insured event, such as death or a benefit defined at the maturity of the plan. This plan secures NRIs & their family members during all financial hardships by providing a huge range of flexible life insurance plans, helping to achieve financial objectives.
How does a Life Insurance Plan for NRIs work?
The following are the steps on how a life insurance plan works for an NRI:
Step 1: Determine Adequate Coverage
- Determine the financial needs of your dependents at the time when you will not be present, which includes loans, future education costs, living costs, etc.
- Consider your desired lifestyle, inflation factor, & currency depletion over a policy tenure.
- Determine the sum assured that best aligns with the financial requirements, offering financial security.
Step 2: Choose Payment Frequencies
- Choose the frequency of premium payment, i.e. monthly, quarterly, half-yearly, or annually.
- This should be chosen after considering your income flows from abroad.
- NRIs can easily make premium payments via online transfers from abroad using their NRE accounts.
Step 3: Evaluate Policy Duration
- In the case of a term plan, one can well align the policy tenure with the period when the dependents would require financial support.
- Synchronise your present life stage requirements & financial obligations.
- Consider the extension of your coverage with the family extension to grow with time.
Step 4: Consider Relevant Riders
- Consider the additional riders to enhance the plan at some added cost.
- Consider the challenges to accessing standard & affordable medical facilities abroad.
Step 5: Streamline Documentation
- Inform the insurance company if any incident takes place, along with relevant documents.
- Make sure the documentation is complete for faster processing.
- The payouts are released to the nominees once the documents are verified.
Eligibility Criteria
The following is the list of individuals who can avail a Life Insurance for NRI:
NRIs
An Indian citizen with a valid passport who is residing in another country for work or educational purposes is known as an NRI if they reside for more than 182 days or more in the previous financial year.
Foreign Nationals
They are citizens of a foreign country residing in India, i.e. an individual who is not an Indian citizen.
Person of Indian Origin or Overseas Citizen of India
(a)- Any person of full age & capacity,
- who is a citizen of another country but was a citizen of India at the time of, or at any time after the commencement of the Constitution, or
- who is a citizen of another country but was eligible to become a citizen of India at the time of the commencement of the Constitution, or
- who is a citizen of another country but belonged to a territory that became part of India after the 15th day of August 1947 or
- who is a child, a grandchild, or a great-grandchild of such a citizen, or
(b) A person who is a minor child of a person as mentioned in point (a) or
(c) A person who is a minor child whose both or any one of the parents are Indian citizens or
(d) Spouse of foreign origin of a citizen of India or spouse of foreign origin of an Overseas Citizen of India Cardholder registered under section 7A.
Types of Life Insurance Plans for NRIs
The following are the types of life insurance plans for NRIs:
Term Plans:
A term insurance plan for NRIs offers financial security to the family members, with affordable premium costs. It provides many advantages, such as flexible policy terms, easy claim settlement processes, cost-effective premiums, etc. However, one should take into consideration certain factors, such as documents required, eligibility criteria, taxation benefits, medical examination required, etc., thus helping in choosing an insurance company.
Child Plans:
A Child Insurance Plan helps secure the financial future of your child & meet rising educational expenses. Parents always work hard to offer their children the best possible to fulfil their dreams. A part of the premium is allocated towards insurance, which ensures the financial security of a child in case of the sudden demise of the parent. The remaining part of the premium is allocated towards investments, which can be used to build a corpus for their education, marriage, etc.
Retirement Plans:
A retirement plan is a Long Term Investment Plan that is well-designed to fulfil all your day-to-day needs post your retirement. An individual can also save by investing money through regular payments or a lump sum over a specified period. Thus, ensuring a stable income during retirement years provides financial security.
ULIPs:
ULIPs are insurance cum investment plans that allow investor to meet their long-term financial obligations, along with life insurance coverage. A part of the premium amount paid is allocated towards the funds opted for, & the remaining amount is allocated towards life insurance. This plan also offers an option to switch between the funds & your changing requirements. If the insured dies suddenly, his nominees will receive the death benefit or the fund value, whichever is higher. In case the insured survives the policy, he will receive the fund value that would have been accumulated, depending on the fund’s performance.
Conclusion
The NRI life insurance plan lets you build corpus funds, offering assured returns & life coverage protecting your family members in case of sudden demise. Whether an NRI opts for a pure life cover or wealth creation life insurance offers flexibility. It lets you secure the financial future of your family members by selecting an appropriate plan, thus ensuring timely payments of premiums & availing tax benefits. Hence, investing in a life insurance plan for NRIs offers financial security, taxation benefits, & investment potential, thus ensuring fulfilment of future financial obligations.
