Term Insurance For NRI

What Is an NRI Term Insurance Plan?

An NRI term insurance plan is a life insurance policy designed for NRIs to protect their family’s future. These plans provide a sum assured to nominees after the policyholder’s death. 

Term insurance for NRI in India allows individuals to select a customised sum assured, pay premiums online , and provide flexibility in payout modes. Payout modes can be lump sum or instalments to suit the needs of beneficiaries in India or abroad.

Some insurers may also allow premium payments from NRE/NRO bank accounts or international remittances, making the process more convenient for policyholders. Therefore, all features of such term plans are applicable depending on the insurer’s rules.

Consider an NRI working in Dubai who buys a ₹1 crore term insurance plan in India. If something unfortunate happens, their family in India may receive a lump sum amount, which will help them financially. 

They can easily repay their outstanding loans, cover the expenses of their children’s education or marriage, or simply pay for regular expenses.

Features of NRI term insurance

While the term plan for NRI is similar to the resident term plans, it has distinct features, given below:

1. Flexible Premium Payment from Abroad

Term insurance for NRIs makes it easier to pay premiums from anywhere in the world. This is because policyholders can use NRE, NRO, accounts to transfer funds directly. 

Many insurers also accept international credit cards, debit cards or online remittances, ensuring seamless transactions for paying the premium of their term insurance policy. NRIs can select to pay the premium either monthly, quarterly, half-yearly, or annually, based on their convenience. 

In some cases, currency conversion charges may apply, so NRIs should check the applicable exchange rate rules with their bank or insurer. 

2. Choose the Right Sum Assured

The sum assured is the most important feature of a term life insurance for NRIs. This is because it determines the financial support your family will receive. 

NRIs should calculate this based on their current income, outstanding loans, children's education costs, and dependents' lifestyle expenses in both India and abroad. You should use a term insurance calculator to calculate an accurate coverage amount that balances between affordability and long-term financial security. 

Depending on your existing assets, liabilities and expenses, NRIs can choose the coverage amount for term insurance for parents that is likely to be enough for their family's financial future.

3. Flexible Policy Terms

NRI term insurance offers a wide choice of policy durations. Therefore, depending on your financial goal, you can select a short, medium or long-term cover, or even opt for whole-life cover with some insurers. 

Aligning the term plan features with your personal financial goals ensures that your loved ones remain protected during crises. Hence, having flexible policy terms will allow you to convert to different term plans or renew existing plans. 

4. Tax Benefits

Premiums paid for NRI term insurance are eligible for deduction under Section 80C³ of the Income Tax Act 1961¹, subject to the prescribed overall limit of Rs. 1,50,000. While death  proceeds are completely  tax-free under Section 10(10D) ³, the maturity proceeds may be exempt from tax under Section 10(10D)³ of the Income Tax Act, 1961³ subject to conditions prescribed

Since taxation rules differ across countries, especially for NRIs with dual obligations, it is advisable to consult a qualified tax advisor to understand cross-border tax implications and ensure compliance with applicable laws.

Key Benefits of NRI Term Insurance? 

Here are the different benefits of a term insurance for NRIs:

1. Financial Security for Family in India or Abroad

The major benefit of NRI term insurance is the financial safety net it creates for your loved ones. In case of the policyholder’s death, the insurer provides a lump sum payout to beneficiaries. 

This amount can be used to repay home loans, cover children’s education expenses, or cover daily expenses regardless of where the family resides. 

2. Peace of Mind Across Borders

Living abroad often comes with uncertainties for different reasons, such as job instability, health risks or costly living standards. Therefore, purchasing an NRI term insurance in India will give you peace of mind, knowing your family’s finances will remain secure even if something unfortunate occurs while you are outside India. 

This cross-border assurance is crucial, especially for those frequently travelling between countries. 

3. Protection Against Currency Fluctuations

A significant challenge for NRIs is the instability of foreign exchange rates. With a fixed payout for NRI term insurance in India, beneficiaries are protected from sudden fluctuations in the foreign currency values. 

In addition, this ensures families receive consistent financial support without being affected by exchange rate volatility. It can negatively impact your financial planning and wealth accumulation, highlighting the importance of buying term insurance with a fixed payout as a safer option. 

4. Seamless Claim Settlement in India

Another major benefit of term insurance for NRIs is the ease of claim settlement in India. Nominees do not need to navigate foreign legal or financial systems. Instead, they can file claims directly with the insurer in India. 

Consequently, this will ensure a faster and hassle-free process during a crisis. A desired claim settlement ratio is above 95% indicating a high payout by the company for the claims filed. 

5. Flexibility to Add Coverage Enhancements

A flexible NRI term insurance allows policyholders to customise their policy by adding riders. Such additional features include accidental death, critical illness, or permanent disability. 

With these add-ons, protection is ensured for individuals depending on their risk profiles. Furthermore, increasing existing coverage limits is possible with flexible term insurance policies for NRIs, depending on their changing needs and situations.

6. Tax Efficiency for Indian Income

Investing in term insurance for NRIs can be beneficial because of the tax advantages under the Income Tax Act 1961. Here are the different applicable tax provisions applicable to NRIs buying term insurance in India:  

• Section 80C¹: Premiums paid towards term life insurance are eligible for deduction under this section up to ₹1.5 lakhs. 

• Section 10(10D)¹: The insured sum received by the policyholder’s family is exempt from taxation subjected to the conditions prescribed.

• Tax Deducted at Source (TDS) Applicability:  If life insurance policy for NRIs become non-compliant under Section 10(10D) of the income Tax Act, 19613 then TDS applies to payout amounts under Section 195 

Note: It is essential to note that the total deduction available under section 80C of the Income Tax Act, 1961³, considering all the prescribed investments allowed including NPS, PPF, ELSS, Tution fee, etc under this section should not exceed Rs.1,50,000 per year and is available under the Old Tax Regime only.

Why Choose the NRI Term Insurance Plan Offered by HDFC Life?

Term insurance for NRI in India offered by HDFC provides extensive coverage and ensures financial security for the policyholder’s family, even when living abroad. The flexibility of premium payments and policy tenure is an added advantage. NRIs can consider their family’s future needs and monetary objectives to decide the sum assured. They are eligible for term insurance tax benefits under Section 80C and Section 10(10D) of the Income Tax Act 1961, making the plan economical.

The add-on^* benefits like critical illness riders and accidental death benefit riders enhance the coverage. With the facility to apply for the term plan online and global protection, it provides peace of mind to NRIs, it is a reliable and accessible option for the security of their family’s future.

What are the Riders^* Offered with NRI Term Insurance?

The riders offered with term plan for NRI are:

• Accidental Death Benefits

NRIs can opt for add-ons^* such as accidental death benefit riders to the base plan. An additional payout along with the death benefit in case the policyholder dies in an accident enhances financial protection.

• Terminal Illness Benefits

The terminal illness benefits riders^* added to the term insurance for NRI provide a lump sum payout if the policyholder is diagnosed with a terminal illness.

• Cover Against Critical Illness

By opting for critical illness, riders^* Non-Resident Indians (NRIs) get coverage against critical illnesses like heart disease, kidney failure, cancer, etc. The insurer provides a pre-determined lump sum if the policyholder is diagnosed with any of the critical illnesses listed under the plan.

• Waiver of premiums on Disability

Adding the waiver of premium on disability riders to the base plan will help if the policyholder is permanently disabled due to an accident and loses a job during the policy term. The future premiums will be waived while keeping the policy active.

How Do Term Insurance Plans For NRI Work in India?

For NRIs, term insurance plans in India work in the same way as regular term plans. There is no big difference that can become a cause of worry for NRIs. When the policyholder keeps paying the NRI term insurance premium in a timely and full manner, the assured sum is given to the nominee if the policyholder dies during the tenure of the Life Insurance for NRI Policy. Also, if the policyholder survives the tenure of the insurance policy, NRIs may choose the return of premium (ROP) option, in which the entire amount of premium payment is returned to the NRI policyholder at maturity. Furthermore, NRIs can expand the coverage of their plan by adding more optional riders or add-ons.

How to Buy NRI Term Insurance from Abroad or While in India?

You can easily buy term life insurance for NRI from abroad or while in India, following the simple steps given below:

1. While in India
    

If you are currently residing in India and want to buy a term insurance for NRI, here are the steps you need to follow:

1. Apply online through HDFC Life or click the ‘Resume Application’ button visible at the top.

2. Complete the eKYC using your Aadhaar, PAN, and passport details. 

3. Submit required documents (passport, visa, income proof, and address proof). 

4. Undergo medical tests at insurer-approved centres in India. 

5. Pay premiums via NRE/NRO accounts, debit/ credit cards, or net banking. 

6. Receive the policy issuance confirmation once the verification is complete.

2. Staying Abroad
    

Buying the best term insurance plan for an NRI is also possible if you are staying abroad. Simply follow the steps below:

1. Visit the HDFC Life portal and complete the online application. 

2. Upload the scanned versions of the required documents. These include: 

   • Passport

   • Visa

   • Income Proof

   • Address Proof

3. Complete the eKYC process.

4. Medical tests can be arranged with partner labs abroad. 

5. Make the payment through international cards, NRE/NRO accounts, or remittances. 

Note: Some insurance companies may restrict the application for an NRI term insurance in India due to compliance rules or high risk involved.

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