Saving Mantra Blog: Step-by-Step Process for NRI to Buy Term Insurance in India
Term insurance is a cost-effective way for NRIs to secure their family’s financial future in India. Choosing the right policy requires understanding eligibility, documentation, premium structure, and legal compliance.
This guide provides a step-by-step process for NRIs to buy term insurance in India.
✔ Step 1: Determine Insurance Requirements
- Assess coverage needs based on:
- Family financial security
- Outstanding loans or liabilities
- Children’s education and future expenses
- Use insurance calculators to determine sum assured
Tip: Opt for coverage that provides adequate protection without overpaying premiums.
✔ Step 2: Check Eligibility for NRIs
- Age criteria: Typically 18–65 years
- Residency: Must be an NRI residing abroad or in India temporarily
- Health and lifestyle factors influence premium rates
- Some insurers require a local Indian bank account
✔ Step 3: Choose the Policy Type
- Level Term Insurance: Fixed sum assured throughout policy term
- Increasing Term Insurance: Sum assured increases periodically
- Return of Premium Term Plan: Returns premiums if insured survives the term
Tip: Compare multiple insurers for premium rates, claim settlement ratios, and policy benefits.
✔ Step 4: Complete Documentation
Required documents for NRI applicants:
- Passport and Visa / OCI / PIO card
- PAN card (mandatory for Indian tax compliance)
- NRE/NRO bank account details for premium payment
- Proof of residence abroad
- Medical reports, if required
✔ Step 5: Medical Examination (if required)
- Insurers may require health check-ups depending on:
- Age
- Sum assured
- Medical history
- Some policies offer no-medical insurance for lower coverage amounts
✔ Step 6: Application and Premium Payment
- Submit online or offline application
- Pay premium via NRE/NRO account or other acceptable methods
- Choose policy term (typically 10–40 years)
✔ Step 7: Policy Issuance and Verification
- After review, insurer issues policy document
- Verify:
- Sum assured
- Premium amount and frequency
- Policy term and beneficiaries
✔ Step 8: Nominee Selection and Record-Keeping
- Name primary and contingent nominees
- Keep digital and physical copies of the policy document
- Regularly update contact information and beneficiary details
✔ Step 9: Understanding Claim Process
- Death claim settlement is tax-free under Section 10(10D)
- Submit policy document, death certificate, and nominee ID proof
- Claims processed via Indian insurer or their overseas offices
✔ Step 10: Review Policy Periodically
- Review insurance coverage every 2–3 years
- Update coverage based on:
- Family needs
- Inflation
- Change in residence or employment status
FAQs – Buying Term Insurance for NRIs
Q1: Can NRIs buy term insurance in India?
A: Yes, most Indian insurers offer term insurance to NRIs residing abroad or in India temporarily.
Q2: Are premiums for NRIs tax-deductible?
A: Yes, premiums are eligible for deduction under Section 80C of the Income Tax Act if paid from an Indian bank account.
Q3: What documents are required for NRIs?
A: Passport, Visa/OCI/PIO card, PAN, NRE/NRO account, proof of residence abroad, and medical reports if required.
Q4: Is medical check-up mandatory?
A: Depends on age, sum assured, and insurer; some lower coverage policies do not require a medical test.
Q5: How are claims settled for NRIs?
A: Claims are processed by the insurer in India, requiring policy documents, death certificate, and nominee proof; settlement is tax-free under Section 10(10D).
Conclusion
Buying term insurance in India is a crucial step for NRIs to protect family and financial interests. By following this step-by-step guide, NRIs can ensure proper coverage, legal compliance, and hassle-free claims.
Disclaimer
This blog is for informational purposes only and does not constitute legal, tax, or financial advice. Insurance regulations and tax laws may change. NRIs should consult qualified professionals before purchasing term insurance in India.