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Term Insurance Policies for Non Resident Indians

The word term insurance becomes quite confusing to understand when it is contradicted to its counterpart ‘the whole life insurance’. Many companies also use the word ‘term assurance’ to these policies. In India, the word term insurance refers to a policy that provides financial cover by assuring an amount for the life of a person who is the policyholder during a specified interval of his life (called the term). The sum assured gets pooled in the form of premiums during the term of the policy. It is different from other life insurance policies in a way that there will not be other benefits like benefits on survival, benefits as bonus etc. Policies with low premiums and life cover for a specified term is the typical characteristic of few term insurance policies in India. Term insurance policies give financial certainty in the form of life cover to Non Resident Indians who live across the borders of India.

How can NRI procure Term Insurance:-

Insurance can be taken by an NRI in two ways:

1- When they are visiting India, they can buy insurance and complete all the formalities related to the underwriting of the insurance policy. This policy is treated at par with any other policy taken by an Indian.

2- The insurance can be purchased in the country of their current residence. This policy is treated as mail order business and it has to be verified by an official of the Indian embassy or, an Indian diplomat or, notary or, medical representative or a dean or supervisor in case of a student.

Features and core essence of NRI term insurance policies:

Term: NRI term insurance policies in India are available with a term of about 6 months to 25 years. The policy is subjected to age of the NRI during the purchase of the policy. The minimum age of an NRI to buy a term insurance policy is 18 years and the maximum age can be from 55 to 60 years depending on the term of the policy.

Sum assured and premium

These criterion of a policy are interdependent; the maximum sum assured for a NRI term insurance policy can be as high as Rs 1crore and the minimum has to be Rs 2lakhs. The premiums are calculated based on the term of the policy, sum assured, payment frequency of premium (monthly, quarterly, half yearly, annual) and the riders opted. The total sum assured will be paid to the nominee in case of death of the policyholder during the term. This amount is credited to the NRE account of the nominee.

Renewal of policy

Some of the term insurance policies also have an option for renewal of policy at maturity. The company may require few tests related to health of the policyholder to be conducted in order to renew the policy. There should not be any dues in payment of premiums on date, in order for the renewal to take place.

Grace period

There will be a grace period for payment of due premium of the policy. This is usually 15 days for a policy with a premium payment frequency of 6 months or 1 year.

Document Requirements: The documents that have to be submitted includes prescribed proposal form, proof of income and age, attested passport copy, report on health condition of the policyholder, application amount equal to first premium, special report if any, etc. Additional documents are required if insurance is bought through Mail Order Business. Few insurance companies have standardized categories for lives of people i.e. the sum assured depends on the nature of job, country of residence and income of the policyholder. The application process proceeds based on the underwriting process of documents related to health of the policyholder.

Internet banking premium payment Non Resident Indians can also make their premium payments through internet banking. There will be a set of authorized banks that can make electronic transaction to insurance company; the policyholder who has an account with such banks that are authorized by insurance company can make his payment through net banking. It is important for an NRI to know every term and condition of net banking before purchasing a term insurance policy.

NRI Term insurance policy providers in India:-

1- LIC
1- Kotak

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