Ajay had moved to the United States for an employment-related commitment for two years. He met with an accident over there and subsequently passed away. He was the sole breadwinner of the family and is survived by his wife, elderly parents, and children. A person’s loss affects the family emotionally and financially. However, Ajay had a term insurance plan worth INR 1 crore that ensured the family’s monetary well-being during his absence. So, this indicates that the term plan meaning is a policy, which pays the death benefit to the policyholder’s family in case of his or her demise during the plan’s tenure.
In this case, Ajay’s loved ones could receive the sum assured even when he was not in the country because the term insurance policy held in India was valid when he was in the US. So, if your nature of work requires you to shift overseas for a couple of years, your term plan in India remains active. However, you need to know about certain clauses regarding this before finalizing your term plan.
It is not compulsory to notify the insurer about your relocation due to personal or professional reasons. However, it is advisable to share this information so that the insurer is aware that you have moved to another country temporarily.
Term insurance for Non-Resident Indians (NRIs)
An NRI is an Indian citizen residing in a foreign country for more than 182 days in a financial year for business, employment, or any other reason. Here are some aspects that NRIs should consider while buying a term plan:
- He or she should be an Indian citizen at the time of purchase; it will ensure that the term plan is in force even if he or she is living abroad for education or employment
- He or she should not have applied for the citizenship of the country of residence or is not planning to do so
An NRI who does not have a term plan in India can invest in one when he or she visits the country. Additionally, he or she can apply for a term plan from the nation of residence via the Mail Order Business Facility.
Features of Term plans for NRIs
Here are a few highlights of a term plan for an NRI:
- Age and policy tenure
Just like traditional term insurance plans, the minimum age to apply for an NRI term plan is 18 and the maximum age is between 55-60. The policy duration ranges between six months to 25 years.
- Sum assured
The sum assured can be anywhere from INR 2 lakh to INR 1 crore. If the policyholder dies during the tenure, the insurer will grant the death benefits in the beneficiary’s Non-Resident External (NRE) account.
Factors like the sum assured, riders, age, and tenure influence the premium. The insured can pay the premium from his or her NRE or Non-Resident Ordinary (NRO) account or can transfer the money through foreign currency remittance. The premium of an NRI term policy is approximately equal to the cost paid by Indians when they buy term plan online.
- Documents required
A few documents needed to apply for an NRI term plan include:
- Age proof
- Employment details
- Medical report
- Attested copy of visa and passport
- Income tax returns
The documentation varies among insurers. So, kindly get detailed information before applying.
- Claim process
Here is a list of documents that the beneficiary of the policy will have to furnish upon the death of the policyholder. Besides the claim intimation form, original copy of the policy, and copies of address and identity proofs, the beneficiary will have to submit:
- Employer’s certificate
- Embalming certificate (if the dead body is preserved)
- Death certificate copy attested by the Indian Embassy
- Translation of these documents if the originals are not in the English language
An NRI term insurance plan is a great initiative by the Indian insurance sector. If you are an Indian but have plans to move to another country, buying a term plan right now will be a wise idea. You can use a term insurance premium calculator to determine the cost you will have to pay for a suitable sum assured.
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