Term Plans for Financial Security
A term plan is one of the most affordable life insurance plans. It is a protection-oriented plan that offers a death benefit in the event of your unfortunate demise during the policy term. When you opt for a term insurance plan with your parents as nominees, it ensures that they're financially protected even if you're no longer around.
Your parents, especially if they’re financially dependent on you, can be left without a source of financial support in case of your demise. A term plan ensures they receive the sum assured in case of your unfortunate demise, which can be used to cover:
- Monthly expenses
- Medical treatments/ Long-term healthcare needs
- Caregiver support
- Emergency hospitalisation
Claim Transfer to Parents
A life assured is an individual covered under the plan. If you are the life assured and have appointed your parent(s) as the nominee(s), in the event of your death, they will receive the policy payout, known as the death benefit.
During the claim settlement process, the details of the death, such as the place, date and cause of the death, are to be provided. The following documents would be required when a claim is raised:1
- The death claim form (provided by the life insurance company/ downloaded from their website)
- Death certificate
- Policy documents
- Deeds of Assignments / re assignments (if any)
- A legal evidence of title will have to be produced if a nominee is not assigned
- Discharge form.
When a life insurance policy reaches its maturity date, the insurer will typically inform the policyholder about two to three months in advance. This intimation will be sent to you along with a discharge voucher, which will outline the maturity amount that will be paid. To initiate the maturity claim, the following steps are to be followed:
- The policyholder and a witness need to sign the discharge voucher (which serves as an acknowledgement of payment)1
- Return it to the insurance company along with the original policy document.1
Once the maturity amount is released, you can then make the transfer to your parents in the way you desire.
Life Insurance Add-Ons You Can Choose to Support Ageing Parents
As an NRI in Canada, you can secure additional coverage for yourself and, in the process, help your parents too. Wondering how?
The answer is life insurance riders. Also known as add-ons, riders are additional coverage benefits that can increase the scope of your life insurance policy. They can give you additional financial assistance at a nominal additional premium, which you, in turn, can use to support your parents. Let’s have a look at the riders and how they help -
Critical Illness Benefit Rider
If you're diagnosed with a critical illness that is covered by the rider, you get a lump sum amount. This can help you access the best possible treatment. Moreover, if you are unable to work due to illness, the benefit received can provide financial support to your parents even in the absence of an income.
Accidental Death Benefit Rider
In the unfortunate event of accidental demise, the accidental benefit rider ensures your parents receive an additional payout along with the base sum assured. It serves as an additional financial cushion that can help them remain secure and independent, even in your absence.
Income Benefit Rider
This rider guarantees* a fixed monthly income to your family for a specified period in case of your death or disability. For elderly parents who rely on you financially, this can be an invaluable way to ensure their household expenses and medical needs are met regularly.
Choosing Your Parents as Nominee? Here’s What You Need to Know
When you purchase a life insurance policy, it is essential to understand the policy nomination process. While choosing your parents as the nominee is a way to financially safeguard them, there are a few important things to consider. You need to ensure that when the time comes, your parents can get the policy benefits without any trouble at all. Keep the following points in mind:
- Nomination is mandatory when you buy life insurance
- When you buy a life insurance plan, depending on the type of plan you choose, you can choose a payout. Depending on your parents’ ability to manage the payout, you can either choose a lump sum payout or a regular payout.
- When you appoint your parents as nominees, you need to consider their age and health because if they pass away before you, the nomination will become void unless updated. So, keep your nominee updated at all times.
- Ensure that all the nominee details are updated with your life insurance company. Incomplete/ faulty details can delay the claim settlement.
- Make sure your parents understand how the claim settlement will work in your absence.
Conclusion
For many NRIs in Canada, one of the most significant financial responsibilities is ensuring the well-being of their ageing parents back home. Rising medical expenses, domiciliary care, and urgent medical needs make it crucial to align your financial plans. Choosing the right life insurance plan that helps create a financial safety net for your parents can help ease the associated financial needs. Enhance the scope of the policy with optional riders for all-around financial support in illness or accidental eventualities.
FAQs
Can Canadian citizens buy life insurance in India?
Absolutely. NRIs and PIOs can both easily buy life insurance in India. This can be done either physically, during a visit to India, or online, regardless of your location.
As a Canadian NRI, can I choose my mother as my life insurance nominee?
Yes. When you buy life insurance in India, parents, spouse, and children can be chosen as your life insurance nominees.
Can I add both my father and mother as nominees in my life insurance policy?
Yes, you can add two or more nominees to your life insurance policy. However, in such cases, you need to specify the percentage of death benefit that each nominee would receive.
