In the context of financial planning, term insurance is one of the most misinterpreted instruments for Non-Resident Indians (NRIs). Even though one of the simplest and most efficient means of securing a family’s future, many NRIs ignore or misconstrue major features of term insurance policies. This lack of understanding normally results in bad choices, inadequate coverage, or actual policy rejection.
In this article, we will crack the five most prevalent myths that NRIs have regarding term insurance and how you can correct them right away to make wiser, better-informed financial decisions.
1.Myth: “I Can’t Purchase a Term Plan from India, Being an NRI.”
Fact: One of the most common myths is that NRIs are not allowed to buy term insurance from Indian companies. In reality, the majority of well-known Indian insurers sell NRI term insurance policies, with specialised products designed especially for those abroad. NRIs are free to buy the plans during a visit to India or through online portals without entering the country.
Fix: Investigate term insurance companies in India with NRI-specific products. Platforms now enable digital onboarding, video KYC, and telemedical check-ups. Also, purchasing from India may be cheaper compared to overseas options because of premium rates lower costs.
2. Myth: “My Foreign Policy Covers Everything – I Don’t Need an Indian Term Plan.”
Fact: Most NRIs depend entirely on the policies from where they are staying, thinking they’re enough. They have the tendency to be more expensive, have complicated claim protocols, or even lack long-term portability if you go to another country or come back to India.
For example, a term insurance for NRI in Canada may suit you fine while you’re there, but what if you move to the UAE or back home? Cross-border portability and beneficiary access are big concerns.
Solution: Complete your foreign policy with an Indian term plan. This offers diversification, worldwide claim support, and ensures that your dependents in India get easy access to benefits in INR, without the hassle of foreign exchange and legal procedures.
3. Fallacy: “NRIs Pay a Much Higher Premium Than Indian Residents.”
Fact: This holds only partially and varies with a number of factors such as the residence country, age, health, and policy term. Some nations are placed in higher risk bands by insurers (e.g., war-prone areas), which impacts premiums. But for most, premium rates for NRIs are similar to resident Indians, particularly for those who reside in secure nations such as the US, UK, UAE, or Canada.
Solution: Use online comparison tools to explore your eligibility across different providers. While some insurers may impose higher rates, others are more lenient based on risk profiles. Choose insurers offering competitive premiums and robust claim settlement ratios. Also, maintain good health records, as this greatly influences your underwriting.
4. Misconception: “Claim Settlement Will Be a Nightmare for My Family.”
Reality: Most NRIs fear that in the event of a mishap overseas, their relatives back home in India will find it difficult to deal with the claim. But this concern is mostly a relic of the past. Top Indian insurers now provide special NRI helpdesks, international claim support, and streamlined online documentation.
Additionally, with nominee and claim payment procedures incorporated into the Reserve Bank of India’s (RBI) rules, repatriation of money to India has become simpler, quicker, and clearer.
Fix: Make sure you opt for a policy with easy claim procedures and an NRI-dedicated support system. Educate your nominee regarding the policy terms, documents needed, and points of contact for filing claims. Additionally, choose an insurer with a good claim settlement ratio and a good history of handling NRI claims.
5. Myth: “I’ll Wait Until I Return to India to Buy a Policy.”
Reality: Putting off buying term insurance is a serious error. The sooner you buy, the younger and healthier you are, and the lower your premiums will be. Not only does it make you more expensive, but waiting also increases the likelihood of contracting health conditions that could result in exclusions or policy denial.
Additionally, life is full of uncertainties. Temporary overseas visits can also become permanent moves. Waiting till you are settled in India to take life cover can expose your family in this interim period.
Solution: Don’t wait. Whether you are well-settled in Dubai or employed in Toronto, plan your family’s future today. NRI term insurance plans are adaptable, internationally acceptable, and inexpensive when purchased at an early stage. Fix your premiums at lower rates while you are young and fit.
Final Thoughts: Empowering NRIs with the Right Insurance Knowledge
Term insurance is more than a financial product; it’s a promise. For NRIs, particularly those with financial obligations in India, getting this promise correct is essential. Whether you are considering NRI term insurance products for the first time or reviewing your existing protection policy, you should steer clear of the pitfalls and myths.
With greater awareness and a clear grasp of your specific needs, you can design a policy that provides comprehensive protection, fewer headaches, and peace of mind, wherever life leads you. By closing the gap between intention and informed action, NRIs can make wiser, longer-term insurance decisions that safeguard what’s most important.
