Tue. Feb 11th, 2025

How to Choose Right Life Insurance Plans for NRIs with Global Cover

Choosing a right life insurance plan is not an easy affair for Non-Resident Indians, especially NRIs who spend their time overseas. A perfect life insurance should cover the financial liability of the family in case an untoward incident occurs. Besides, the cover should extend across the world, so the NRIs would not be deprived of the facility while staying in another country or going abroad for business or personal work. It refers to covering a person living outside his/her own country as an NRI through a life insurance policy issued here.

Therefore, when choosing the best life insurance plan with a global coverage package, there are a few basic things to take into consideration: the financial requirements of the family, the volume of coverage desired, and a policy that aligns with one’s budget. It is equally important to find an insurance firm that has extensive global reach with good customer care. It is also important to review the terms and conditions of the policy, including the countries where coverage is provided, to ensure that you are adequately protected worldwide.

Understanding the different types of life insurance policies and how they work is essential to making an informed choice. This article provides key tips for NRIs on how to select the best life insurance plan with global coverage.

Understand the types of life insurance plans available for NRIs

Life insurance plans for NRIs come in a variety of forms, each with different levels of protection and benefits. The two most common are term insurance and endowment plans.

Term Insurance Plans:

Life term insurance is considered the simplest kind of life assurance and also pretty affordable. Coverage is available up to a point in time termed as 10, 20, or even 30 years. In such cases, at the death of the policy holder, the maturity benefit will get paid to his beneficiaries. Whereas, if one survives the selected term, that policy would run out without him getting anything.

Most NRIs prefer term assurance because it’s high coverage provided at low costs.
An endowment policy is a combination of life insurance and investment. It gives a death benefit in case of the untimely death of the policyholder during the term of the policy and a maturity benefit if the policyholder survives the term. Although the premiums for endowment plans are more than those for term insurance, they provide a more complete financial package as they offer both insurance and savings.

Understanding the types of life insurance policies available helps NRIs select the plan that suits their needs and budget.

Check for Worldwide Coverage and Global Protection

The scope of the global cover is one of the important factors that NRIs consider when choosing a life insurance plan. Many companies now offer life policies with worldwide protection, which ensures that NRIs are covered anywhere in the world. This becomes an important choice for those who travel often or reside in many countries.

One must check whether the insurance company offers global coverage in all countries where the NRI will likely stay or visit before purchasing a policy. Not all insurance companies offer worldwide coverage in every country, so it’s essential to be sure that the policy will suit you.

Worldwide coverage brings peace of mind, knowing that your family will receive the death benefit, regardless of where you live or travel. It also eliminates any concern about whether the insurance policy will be effective if you relocate to a different country or travel internationally.

Assess the Premiums and Payment Flexibility

In evaluating a life insurance plan, one must take into account the available premium options and payment structures. Some life insurance companies also allow NRIs to pay their premiums in foreign currencies, thus saving on currency conversion and international transfer hassles.

The premium amount should also be within the budget of the NRI. NRIs can opt for monthly, quarterly, or annual premium payment options, based on their income and financial condition. A policy with premium payment flexibility is essential so that the payments are not a burden on the finances.

The NRIs should also check if the premium amounts are affordable and sustainable in the long run. Higher coverage amount means higher premiums; however, there is a balance between coverage and affordability to keep the policy active throughout the coverage period.

Look for Tax Benefits on NRI Life Insurance Policies

One more important consideration while finalizing the NRI life insurance plan is the tax benefit the premium will bring. An NRI person with financial links in India can also avail tax deduction under Section 80C of the Income Tax Act on the amount of premiums paid on a life insurance policy. Thus, this is a much-needed financial benefit as it reduces taxable income in India.

The sum obtained by the beneficiaries from the life insurance policy is usually not subject to income tax under Section 10(10D) of the Income Tax Act. This means that the beneficiaries would get the total payout without any deductions, ensuring that they would get full support financially in case the policyholder dies.

NRIs should also be aware of the tax implications in their country of residence. Some countries may offer additional tax-saving benefits for life insurance premiums, so it’s advisable to consult with a tax professional to understand the full extent of available tax benefits.

Ensure the Insurance Company Has a Strong Reputation

Reputation, in addition to a healthy financial status, is a critical factor for a life insurance plan. NRIs should opt for an insurer which has a good history of claim settlement within a very short period of time. The company with a high claim settlement ratio will ensure that the beneficiaries receive the death benefit in time without any delay.

It’s also important to assess the insurance company’s customer service. NRIs should opt for an insurer that provides reliable customer support, including easy access to policy management and claim assistance. Insurance companies with a strong presence in both India and the NRI’s country of residence are typically better equipped to handle the needs of overseas citizens.

One would do well to read reviews and feedback from other NRIs on the quality of service and reputation of the insurer before making a decision.

Additional Benefits and Riders

In addition to basic life, many NRI life insurance companies additionally provide riders and add-ons that can improve the protection delivered by the policy. The riders are add-ons that can be added to the base of NRI life insurance that will go ahead and provide additional coverage. Some common riders available with NRI life insurance plans include: Critical Illness Rider
This rider gives protection against financial losses if the policyholder is diagnosed with a serious illness like cancer, heart failure, or renal failure. It covers the expenses of treatment and other medical care.

Accidental Death Rider:

This rider guarantees that the amount paid to the beneficiaries is additional in case of death through accident. It is an additional protection against unexpected death.

Disability Rider:
In case of permanent disablement through an accident or illness, the policyholder will receive a lump sum that can be used for medical costs and day-to-day expenses.

Riders allow NRIs to tailor their life insurance policy according to their specific requirements. Riders raise the premium but enable the policyholder to receive extra coverage. Refer to the Claim Process and Settlement Ratio

The claim settlement ratio and settlement ratio of the insurance company is an important aspect to consider when choosing a life insurance policy. NRIs must look for an insurance company with a high claim settlement ratio, which reflects the fact that the company is settling claims on time.

It is important to know the claims process, including the documentation required and the time it takes to receive the payout. A simple and transparent claims process ensures that the beneficiaries will face minimal stress when making a claim.

Choosing the Right NRI Life Insurance Plan

Choosing the right life insurance plan for NRIs with global coverage requires careful consideration of several key factors, including the type of policy, worldwide coverage, premium flexibility, tax benefits, and the insurance company’s reputation. NRIs should select a life insurance policy that offers comprehensive protection for their families while ensuring that the premiums are affordable and sustainable.

Considering the advantages of various life insurance types, judging the credibility of the insurer, and personalizing the policy by adding riders will help NRIs get a policy that fits their needs and secures their family’s financial future. After all, the perfect life insurance policy will provide comfort in knowing that your family’s future is well taken care of, no matter where you are in the world.

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