5 Key Mistakes NRIs in Kuwait Should Avoid while buying Life insurance

5 Key Mistakes NRIs in Kuwait Should Avoid while Purchasing Life Insurance

Read on to understand what these mistakes are and how you can avoid them.

• Mistake 1: Failure to Disclose Residency Status

  Failing to inform your insurance company about your residency is probably the most common yet serious oversight. Keep in mind that incorrect and/ or incomplete information when submitting the life insurance application can cause a claim denial in the future which may affect your family’s financial security.
  
  What You Should Do

  • Ensure that you inform your life insurance company in India about your residency in the Gulf.
  • It is also essential to update your insurer if you are relocating back to India or to a different country.
  • Additionally, along with your residency, be sure to inform the insurer about your medical condition, history, age, and other relevant details. The insurance company uses this information for underwriting purposes to assess the risk associated to determine your eligibility for coverage and set premium rates that are fair and sustainable for both the company and policyholders.
     

• Mistake 2: Selecting Short Policy Tenure

  Choosing the right policy tenure for coverage is crucial in a life insurance policy. While a shorter tenure may seem adequate and affordable, but it may not align with your long term goals and can lead to major financial stress down the line. Thinking you’ll ‘figure it out later’, can leave you underinsured at a crucial stage in life.
  
  What You Should Do:

  • Relying on a short-term life insurance plan for long-term financial stability can backfire as these policies are designed for temporary needs and may not serve the purpose if your circumstances change.
  • Whenever possible, try to choose a plan that protects you until you hit major life milestones, such as your retirement or when your children become financially independent.
  • Plan your goals first and then choose plans with a policy tenure that aligns with each goal.
     

• Mistake 3: Incorrect Nominee Details

  Nominee is the individual who would receive the policy benefits in the event of an unfortunate occurrence affecting you, the life assured. Incorrect nominee details can create significant problems for your loved ones during an already difficult time. Even small mistakes can cause major delays in getting the funds to your family when they need them the most. So, when you add a nominee, ensure that you enter the details correctly. Also, inform the nominee of the same and explain the claim settlement process to them so that they are prepared to initiate a claim in your absence.
   

  What You Should Do

  • Add a valid nominee, like your spouse, children, or parents.
  • Double-check to avoid making any spelling errors, incorrect surnames, or wrong contact details, etc.
  • At any time, if you wish to change the nominee, update the same in your policy.
  • If your nominee has passed away, you would have to appoint someone else and complete the nomination process accordingly.
  • If you are adding two or more nominees, express their individual share of the death benefit explicitly.
     

• Mistake 4: Choosing Plans That Don’t Align with Financial Goals

  Another significant mistake is failing to understand your insurance needs. A term plan is designed to meet different insurance needs. When you choose the wrong plan, you leave your loved ones vulnerable in an already difficult time.
  

  
  

  What You Should Do:

  • There are several types of life insurance plans available in India. As an NRI, you need to understand these plans and then see which aligns with your goals and needs.
  • Compare different plans and analyse which one would suit you best.
  • Every plan comes with its own set of features. Make sure you understand them along with their inclusions and exclusions.
  • You should read the policy documents carefully. If you have any doubts, please reach out to your insurer .
     

• Mistake 5: Focusing Only On a Lower Premium

  It is only natural that you want a life insurance plan that fits into your budget. However, laying all your focus on the cheapest coverage may not be a good idea. Keep in mind that the primary principle behind purchasing insurance is to ensure that when the time comes, your policy can provide the right financial support.
  
  What You Should Do:

  • Keep in mind that Lower premiums = Lesser coverage.
  • Finding a cost-effective plan is recommended; however, a low premium should not be your only concern.
  • As a thumb rule, advisors suggest that the coverage you choose should be a minimum of 10-15 times your yearly income.¹
  • Compare plans before you make a decision. Try to strike the right balance between the premium and the benefits.
     

• Mistake 6: Not Reviewing Your Policy

  Buying life insurance early in life is indeed a smart idea. However, it is not a one-and-done decision as your life will undergo changes such as getting married, having a baby, and taking out loans to build your assets are instances that can significantly impact your life. In any such scenario, failing to review and update your policy can prove to be a costly mistake.

  
  

  What You Should Do:

  • You should review your policy periodically to ensure it remains aligned with your evolving financial needs.
  • Update your coverage if you feel your responsibilities are increasing.
  • If you feel the need for more coverage, you can either opt for life insurance riders or maybe buy another life insurance policy.
     

Conclusion

Among all aspects of financial planning, life insurance plays a critical role in safeguarding the future. It is like having a strong financial foundation, providing a safety net for your family while helping you achieve long-term goals. As an NRI in Kuwait, buying life insurance in India is a crucial part of securing the future, both in the Gulf and in India. Smart insurance planning can help you enjoy the best of both worlds.

FAQs

1. What is the biggest insurance mistake NRIs in Kuwait make?

   Often, people tend to overlook important aspects when buying life insurance. This can include not understanding different po types, choosing inadequate coverage, and selecting an overly short policy tenure. These things can leave your families financially unprotected.

   
   

2. Should NRIs buy insurance in India or Kuwait?

   Buying life insurance should be a personal decision. However, buying life insurance in India can offer multiple benefits, such as easy claim settlement for loved ones back home, affordable premiums, NRI-friendly plans and tax-saving benefits.

   
   

3. Is it necessary to appoint a nominee?

   Yes, it is important. When you purchase life insurance, the primary goal is to provide financial stability to your dependents. A nomination helps facilitate a smooth and easy claim settlement. Additionally, note that incorrect or outdated nominations can delay or deny claims; review and update them regularly.