Term insurance is undoubtedly one of the most crucial financial tools to secure your family’s future. The matter is the same in India and other countries: your family relies on your income. In case of unexpected events, term insurance makes sure that your loved ones stay financially secure.
The NRI and Indian families’ best term insurance options are explained in this guide through concise and simple language. It unfolds in such a way as to explain the benefits, eligibility, features, and how to choose the right plan.
What Is Term Insurance?
The term insurance is a life insurance that comes with a temporary financial security guarantee known as the policy term.
- You are required to make a regular payment of the premium.
- It’s all the same; if the insured dies during the coverage period, the insurer will pay a specific amount to the beneficiary.
- On the other hand, if the insured lasts through the term, there is no payout.
As there are no savings components involved with term insurance, it is very inexpensive. This cheapness makes it the most suitable term insurance for the majority of families.
Why Term Insurance Is Important for Indian Families
The Indian society basically consists of a few earning members who support the family financially. A sudden income loss can lead to cuts in daily expenses, interruption of children’s schooling, and other long-term needs being put on hold.
Reasons Why Indian Families Should Get Term Insurance
- The family’s lost income is replaced.
- The repayment of home loans and personal loans is supported.
- Children’s education and marriage expenses are met.
- Financial stability is assured even in hard times.
The high coverage at a low cost is the reason why in India life insurance is still considered the cornerstone of financial planning.
Reasons Why NRIs Should Invest In Term Insurance
NRIs frequently have families residing in India that are reliant on their financial assistance. If a tragic event occurs, the family members living abroad can face problems in managing the finances.
This is where NRI term insurance becomes indispensable.
Term Insurance Advantages for NRIs
- Preserves the financial life of the family living in India.
- The policyholder’s living abroad will not affect the validity of the coverage.
- Premiums are lower than the premiums for international plans.
- The nominees in India will receive direct payment of claims.
Numerous Indian insurers have special NRI term plans.
Can NRIs Purchase Term Insurance in India?
Yes, NRIs are allowed to purchase term insurance from Indian insurance providers.
The policies can be acquired in the following ways:
- Directly online through the insurer’s websites
- Through insurance agents
- While visiting India
Medical examinations may be required. Some insurance companies permit the medical tests to be conducted in recognised centres outside India.
The Best Term Insurance Policies: Key Features
The following features should be weighed carefully before any resident in India or an NRI decides on a policy.
1. Adequate Life Cover
The life cover should be enough to meet the needs of your family. A widely accepted rule of thumb is:
- Your annual income multiplied by 10 to 15 times
Higher coverage means more financial security.
2. Policy Term
Select a policy term that coincides with your earning years. The majority of people pick coverage until:
- Age 60
- Age 65
- Age 70
The longer the policy term, the more protection you get.
3. Affordable Premiums
High Insurance coverage at Low Premiums is the characteristic of a great term insurance plan. Premium payments should always fit easily into your budget, so make sure to check that first.
4. Claim Settlement Ratio
This ratio reveals how many claims an insurance company has paid in the past. A higher ratio is an indication of a company’s reliability and trustworthiness.
5. Payout Options
Insurance providers have various payout options available:
- Lump sum payout
- Monthly income payout
- Combination of both
Opt for the choice that is best suited to your family’s financial situation.
Best Term Insurance Options for Indian Families
Indian families should always go for those plans that are characterized by stability, low cost, and hassle-free claim settlement.
Essential Features for Indian Families:
- Maximum sum insured
- Extended policy period
- Possibility of riders
- Excellent customer service
- Easy claims process
The majority of Indian insurance companies provide family-oriented term policies that are appropriate for salaried professionals, businesspersons, and housewives.
Top Term Insurance Choices for NRIs
NRI term insurance policies are nearly identical to the ones for residents, but they give extra convenience to policyholders living abroad.
- NRI term Insurance Key Features Policy issued in Indian currency
- Premium paid through NRE or NRO account
- Global coverage
- Claim settlement in India
However, some insurance companies provide premium payment in foreign currency as per the country of residence.
Riders That Improve Term Insurance Coverage
Riders are optional extras that offer more protection for just a tiny bit more cost.
Common Riders Offered
- Accidental death benefit rider
- Critical illness rider
- Waiver of premium rider
- Permanent disability rider
The addition of appropriate riders could result in your policy being more comprehensive.
What is the Limit for Term Insurance Cover You Should Buy?
The coverage amount that is just right for you depends on your income, expenses, and future aspirations.
Easy Method for Coverage Calculation
Think of:
- Annual income
- Number of years before you can retire
- Debts
- Children’s education
- Basic living expenses of the family
For NRIs, also think of:
- Financial obligations overseas
- Impact of currency rates
- Dependents in India
Choosing the right amount of coverage guarantees your plan will be considered the best term insurance suiting your needs.
Documents Required for NRI Term Insurance
The NRIs must submit their primary documents when buying the policy.
Commonly Required Documents
- Passport copy
- Visa or work permit
- Proof of address (in India and abroad)
- Proof of income
- Latest photographs
- Details of bank account
Additional medical reports depending on age and amount of coverage may be required.
Tax Benefits on Term Insurance
Indian tax laws allow claiming tax benefits for term insurance policies too.
Tax Benefits in India
- Premiums that the policyholder pays may be deducted from his/her total taxable income.
- The death benefit amount is most often tax-free for the beneficiaries.
NRIs must ascertain the tax legislation for their country of residence.
Common Mistakes to Avoid While Buying Term Insurance
Better protection is one of the consequences of not making these mistakes.
Inadequate coverage.
- Wrong health data supplied.
- A too short term policy was selected.
- The insurer’s record for claims was ignored.
- No one informed family members about the policy details.
Proper planning avoids trouble related to the claim in the future.
How to Pick the Ideal Term Insurance Plan
Cope up with these steps for a wise choice:
- Evaluate your family’s financial requirements.
- Determine the necessary coverage amount.
- Look into various plans on the internet.
- Examine the insurer’s reputation and claim history.
- Scrutinise the policy conditions before making a purchase.
Spending time comparing options will enable you to choose the appropriate plan.
Conclusion
Term insurance is an essential component of financial planning for both Indian residents and NRIs. It guarantees that your family will stay financially covered up in the whole world or the part of it where you are located. A proper term insurance plan with the best features and adequate coverage will protect your family from money troubles. For Indians living abroad, NRI term insurance is not only an economically viable option but also the best way to keep Indian family members safe and sound.