20-Year Term Life Insurance for NRIs in Canada
Updated On Jul 18, 2023
Everyone must always be ready for the uncertainties that come with life. Purchasing a term insurance policy is one approach to protect your loved ones' financial future. It not only protects your financial resources but also ensures a lifetime free of tension. All individuals, including NRIs (Non-Resident Indians), are eligible for this protection.
The Indian Diaspora is a significant economic force and a dynamic element of the population in many nations throughout the world. Therefore, any NRI who acquires term insurance coverage must ensure that it meets all of their unique demands and expectations. If you move to foreign countries like Canada or any other, will a 20-year plan in India still provide the same benefits? Let's try to explore this.
Understanding Term Insurance Plans In India
Term insurance is a form of life insurance popular in India. Term insurance provides significant financial protection to the insured's family in the event of their demise within the policy term. This coverage ensures that the policyholder's family can maintain their living standards even when the primary income earner.
One significant advantage of term insurance plans in India is their global coverage. These policies extend beyond the geographical confines of India, offering protection to both NRIs and Indians. Thus, in case of the unfortunate demise of an insured person after he/she relocates to a foreign country, the term insurance policy still remains active. The nominees in India can claim and use the death benefit, which helps provide financial security for the insured's family.
Key Features of NRI Term Insurance Plans
The following are the primary features of term insurance plans for NRIs:
- High Sum Assured: NRIs have a wide range of options when it comes to the policy duration of a term plan. Term plans for NRIs may have a tenure of 5 to 99 years. Additionally, the minimum and maximum ages for purchasing a plan are 18 and 65, respectively, making it suitable for most people.
- Flexible Amounts: People have diverse financial needs, and term insurance enables NRIs to choose the policy cover in accordance as per their needs. Your coverage could range from a few lakh rupees to crores. You are free to decide, and insurance providers do not restrict the maximum amount insured.
- Easy Payments: Online banking makes it simple to pay premiums. NRIs can do this by using FCNR accounts, NRO, NRE, or foreign remittance accounts. They also get to decide how often they want to pay the premium. Annual payments are typically the most practical and advantageous.
- Documentation Process: Applying for term insurance is rather simple if all of your paperwork is in order. NRIs must submit a copy of their passport as well as documentation of their age, income, and medical history. The coverage you select will determine your term insurance premium.
Eligibility For Term Insurance Plans for NRIs
Following is the eligibility criteria to buy term insurance plan for NRIs:
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The NRI must be between the ages of 18 and 65.
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NRI status is a requirement. Furthermore, you can only apply if your country of residence is on a list of eligible nations for term insurance firms.
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NRIs must submit copies of their prior medical records.
Insurance companies restrict certain professions. To find out if your work impacts the purchase of a term plan, check with the insurer. A list of supporting documentation is required when applying for NRI term insurance products.
Are Citizens of Canada Eligible for Term Insurance In India?
Yes, regardless of their citizenship status in India, NRIs and PIOs who live in Canada can get term insurance in India and become eligible for payouts in the event of their untimely death abroad. However, let's first comprehend the meaning of the NRI to determine the application.
Indian nationals who have resided abroad for more than 182 days are considered NRIs. They may, however, trace their origins back to India. Either their spouse, parents, or grandparents are Indian-born, or they are themselves of Indian ancestry.
Consequently, depending on a set of rules, term insurance plans and their benefits are applicable to NRIs.
- The buyer of the term insurance policy must be of Indian descent.
- The person shouldn't have planned to apply for citizenship in another foreign nation soon or have already done so.
- Before shifting and departing, you must let your insurer know that you'll be travelling to a foreign country.
Consider the following example: Mr Gupta was employed by an Indian IT company. He was responsible for looking after his wife, his two daughters, and his dependent parents. As a result, getting a term insurance policy with a sufficient sum insured became very necessary. When he first began his career, he bought a term plan at a reasonable price. Later, in search of better opportunities, he decided to relocate to Canada. But after a few months, he tragically passed away in Canada due to an accident. To lessen the financial burden on his family, the insurer paid the lump sum death benefit because he held an active term insurance policy.
Pointers to Consider While Buying Term Insurance
Keep the following things in mind when looking for term insurance in India if you intend to relocate to Canada:
Premium Payments
If you're an NRI, you can pay the term insurance premium using a non-resident ordinary (NRO) bank account or the FCNR/NRE account if your insurer provides the coverage in foreign currency.
Sum assured
The death benefit will be provided to the nominees regardless of the location where the policyholder passes away. To initiate a death claim, the nominee must inform the insurer about the death and complete all the necessary paperwork.
If the premium paid is equivalent to the amount paid in Canadian currency, the death claim amount can be transferred to Canada. However, if the entire premium is paid in Indian Rupees, it is not eligible for transfer. It is important to note that if you purchased the policy before becoming a non-resident Indian (NRI), the portion of the proceeds based on the premium paid in Canadian dollars can be transferred. Therefore, it is advisable to review the policy documents for precise details before making any investment decisions.
Documents required
- Duly filled insurance application form
- Resident Proof
- Passport Copy
- Copy of Authorized Visa
- Recent six months' bank statements
- Medical Records
- Income Proof
- Age Proof
- Employment ID
- Recent 3 months' Salary slip
- Foreign Account Tax Compliance Act form
Claim process documents
- Certificate of Employer
- Death Certificate verified by Indian Embassy
Consider the taxation guidelines in Canada and make the necessary proceeds promptly to avoid discrepancies later.
Conclusion
NRIs and PIOs can both purchase term insurance policies and benefit from them. So, if you're an Indian living in Canada, you can buy term insurance to protect your family's financial future. Hence, regardless of the untimely circumstances of your passing, your loved ones can still secure a stable livelihood. You can purchase the term plan from Canada or India through online services. To ensure you get the most out of your policy while your family is in dire straits, studying the policy documents before investing is crucial.
FAQs
- What are term insurance add-ons?
Term insurance add-ons are additional riders that can be attached to a term insurance policy to provide coverage for additional benefits beyond traditional life insurance. These riders may include waiver of premium, critical illness cover, accidental death cover, and income protection benefits.
- Can I buy multiple Term Insurance plans?
Yes, multiple Term Insurance plans can be bought from different insurers, but make sure you have calculated your total coverage needs accurately before taking any decision.
- Can I change the frequency of premium payments after purchasing the policy?
Yes, in most cases, depending on the insurance policy, the frequency of premium payments can be changed after purchasing the policy. This may involve submitting a request to the insurance company, which will then decide whether or not to accept the change.
- What happens to the policy if an NRI fails to pay the Term Insurance premium on time?
If an NRI fails to pay the premium on time, the policy will lapse, and the insurer will not be liable to pay the death benefit. However, the policyholder has the option to revive the policy within the Grace Period (usually 2 weeks) by paying the due premiums plus any applicable dues.
- Who is not eligible for Term Insurance?
Typically, anyone under the age of 18 or above 65 cannot choose term insurance. However, in some other circumstances, people might not be qualified. For more on this, kindly consult your insurance advisor.
