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Written by

Lakshey Bahl
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Lakshey Bahl

Insurance Writer

Lakshey Bahl is a digital content expert with 6+ years in insurance space. He has led customer education campaigns and specializes in simplifying life and general insurance concepts for everyday readers.

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Vaibhav Kumar
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Vaibhav Kumar

Insurance Domain Expert

With over 16 years in life insurance, Vaibhav Kumar is a recognized products and digital leader for driving innovation at Axis Max Life Insurance. He's played a pivotal role in developing new business lines and implementing successful D2C strategies.

What is Term Life Insurance for US based NRI?

Term life insurance for NRIs is a pure protection life insurance policy that gives financial support to family members if the insured NRI individual passes away during the policy term. This type of insurance can offer significantly large life cover pay out at affordable cost since it only covers the risk of life loss for a limited term, without any maturity or survival benefits.

Additionally, NRIs in US also get the option to customise their NRI term plans with various add-ons and riders. Opting for these may involve payment of an additional premium, however, these can provide additional financial protection to the policyholder and/or policy beneficiary in the case of events such as diagnosis of a terminal/critical illness, accidental death/dismemberment, etc.

How Do Term Insurance for NRI Plans Work?

US NRI Term Insurance functions similarly to standard term plans in India. Here is how a term plan for NRI in US usually works:

  • The policyholder regularly pays a premium to the insurance provider in exchange for the pre-decided life coverage amount. This premium payment is the cost of the protection offered by the plan.
  • Since the NRI term plan is a pure protection plan, it does not include any investment component. This results in affordable premium rates.
  • In the event of the life insured individual’s demise during the policy term, the insurer pays the agreed-upon sum assured or the life cover, to the designated nominee, providing financial support to the family.
  • NRIs may also choose to opt for return of premium benefit provided by policies like the Max Life STEP Term Plan. This benefit allows the policyholder to receive all premiums paid till date back by surrendering the policy after .
  • To increase protection, NRIs can add riders/add-on to their NRI term plan. These add-ons offer additional pay-outs or coverage for specific conditions or events. Please note that such riders come at additional premium payment.

    • Benefits of Term Life Insurance for US based NRIs

    Term life insurance offers NRIs several important benefits viz., thereby providing peace of mind and financial protection for them and their families:

    1. High Life Cover

    If the life insured dies during the policy term, the nominee receives the life cover pay out, also known as the death benefit. This is the NRI term plan payout which can help cover immediate financial needs, education expenses, or help with debt repayments, ensuring financial stability of the family in testing times.

    2. Tax Benefits

    NRIs may enjoy tax benefits under Section 80C of the Income Tax Act for premiums paid towards their term insurance policies, subject to Indian tax regulations. Additionally, the death benefit paid to the nominee is also tax-exempt under Section 10(10D), providing further financial relief. NRIs also receive the benefit of GST waiver on premium payments as per applicable tax rules.

    3. Return of Premium

    Some term plans offer a return of the premium feature, where all paid premiums are refunded within a specified time window. This ensures that policyholders will receive the premiums already paid back if the policy is surrendered as per applicable terms and conditions under the special exit value~1 rules.

    4. Customisations Options

    NRIs in the US who are purchasing NRI term plan can also customise coverage by adding riders for critical illness, accidental death, or waiver of premium. These customisations can help increase overall protection offered by the plan if specific events occur such as diagnosis of a terminal/critical illness, death/dismemberment in the case of an accident, etc.

    Who is Eligible to Buy Term Insurance for NRI Residing in the US?

    Term insurance is available to various categories of Indians living abroad who want to secure financial protection for their families. Eligible individuals include:

  • Indian citizens residing outside India for work, studies, or other purposes. NRIs are eligible to purchase term insurance plans that provide life cover benefit to family members residing in India.
  • Individuals who hold foreign citizenship but have Indian roots. PIOs can also apply for term insurance in India to protect family members or manage financial responsibilities in India.
  • OCIs, who hold OCI cards allowing them to live or work in India without full citizenship, can purchase term insurance policies that ensure financial security for family members residing in India.
  • They must have an NRE/NRO account for premium payments.

    • What are the Documents Required for Term Insurance Plans for NRI?

    NRIs in US need the following documents to apply for term insurance from India:

  • A valid passport and visa as proof of identity and validating their NRI status.
  • OCI or PIO card for individuals who are Overseas Citizens of India or Persons of Indian Origin.
  • Proof of address, such as a utility bill or bank statement from their current country of residence.
  • Income proof, including salary slips, bank statements, or tax returns, to determine premium rates and eligibility.
  • Medical reports, if required by the insurer, depending on the applicant's age, health, and coverage amount.
  • Any other document asked by the insurer to furnish.
    • Note: this list of documents is illustrative and liable to change periodically based on insurer’s norms as well as on a case by case basis with respect to applicants.

    How to Buy Max Life Term Insurance for NRI in US?

    To buy Max Life Term Insurance as an NRI in USA, the following steps must be adhered to:

  • Visit Max Life official website or contact a Max Life authorised agent to assist you with the NRI term plan purchase.
  • Provide your personal details (name and date of birth) along with your contact details and annual income in the online application form available on the website.
  • Click for your nicotine/tobacco intake, gender, education and occupation.
  • Post this, you will be asked to select your desired life coverage amount, tenure and premium payment frequency.
  • Next, add any riders/add-ons to the policy, if required.
  • Review the policy summary in the final screen and proceed with paying the first premium in full.
  • Once you make the payment, you will receive the confirmation from Max Life Insurance.
  • After this, you will be contacted by the company’s representative who will assist you in submission of all the necessary documents as well as the medical tests.
  • Upon successful verification of these documents and details, the company shall release your policy document and your NRI term insurance policy will be issued.

    • US NRI Term Insurance is a vital financial protection tool for the Non-Resident Indians as well as the PIOs/OCIs residing in the US and seeking to protect their families residing in India. With various plan options tailored to different needs, such as renewable, convertible, and decreasing term plans, NRIs can find the right coverage that fits their financial situation.

     

    By securing a US NRI Term Insurance policy, NRIs can ensure their loved ones are protected financially, providing peace of mind regardless of where they reside.

    Term Insurance FAQs

    Can an NRI in US buy term insurance from India?

    What are the best Term Insurance Plans for NRIs?

    How can you buy NRI term insurance in India?

    Are the premiums paid for a term plan for NRI in US eligible for claiming tax benefits in India?

    Will the NRI term plan payout attract taxes in India?

     

    ARN: Dec24/Bg/14K