Why Term Plans Are the First Priority?
NRIs in Saudi Arabia often view term insurance as an option for providing financial security to their family. It offers a sum assured at relatively affordable premiums, thereby safeguarding the financial needs of their dependents in India. There are several reasons why term plans are a priority. Here are some of them:
High Sum Assured at Affordable Premiums
Term plans are the cheapest form of life insurance and are designed to offer a high sum assured at lower premiums. NRIs in Saudi Arabia can easily opt for a sum assured to protect the varying needs and lifestyle of their dependents in India.
Adequate Coverage for Dependents
Term plans are created to meet the financial needs of dependents in India by offering death benefits in case of demise of life assured.
Riders
To enhance coverage, term plans for NRIs allow opting for riders. Some common examples are critical illness rider, accidental death benefit rider, income benefit rider, and waiver of premium rider, among others.
Latest Trends Assist Changing Needs
Term insurance for NRIs has undergone several trends in the past few years, allowing plans and riders to meet current needs. For instance, Return of Premium Plans offer maturity benefits under term plans if the insured individual survives the policy tenure.
Combining Life Insurance + Investments
To secure the future of your loved ones and create a corpus for their financial goals, NRIs might look at savings-oriented life insurance plans. These plans combine insurance protection with corpus creation and provide dual benefits.
There are two options under savings-oriented life insurance plans which are as follows -
Traditional savings plans
Endowment and money-back life insurance plans fall under this category. These plans do not expose your premiums to market volatility. Instead, the death and maturity benefits are assured* so that you can create a safe corpus for your financial goals. These plans can offer additional benefits in the form of bonuses (if declared), guaranteed* additions, loyalty additions, etc.
ULIPs
For NRIs looking to gain exposure to the Indian markets and earn market-linked returns, ULIPs prove to be the right choice. These plans provide life insurance coverage and invest a part of your premium in market-linked funds, which can help you earn returns over a long-term horizon. Plus, flexible features like switching, partial withdrawals, top-ups, premium redirections, etc. give you complete control over your investments.
Planning for Children’s Education in India
Securing the education needs of children is a priority for parents, especially as an NRI living in a distant land. This is where child life insurance plans come into play.
Designed with the needs of children in mind, including education and marriage, such plans come with a waiver of premium feature, either inbuilt or optional. This feature ensures that the policy continues even after the untimely demise of the parent, without requiring future premiums to be paid. The child can benefit from the maturity benefit, whether the parent is around or not.
Checklist: Smart Planning from Saudi
Purchasing life insurance in India has become easier with the advent of digital platforms. Here’s a checklist for NRIs in Saudi Arabia purchasing life insurance in India:
The Type of Life Insurance They Need
NRIs must first understand the type of life insurance that will meet their and their dependents’ needs. From term insurance to build up your life cover to unit-linked insurance and money bank plans, choosing the right plan is crucial.
The Required Coverage and Sum Assured
Choosing life insurance comes with a simple rule: one size doesn’t fit all. Therefore, it is crucial to understand what kind of coverage and sum assured is adequate for each individual’s needs.
The Tax Liabilities under the Policy
NRIs in Saudi Arabia must carefully evaluate the tax liabilities and exemptions associated with the type of insurance plan they choose.
Did you know that premiums paid against life insurance through an NRE account are eligible for a GST exemption Subject to eligibility criteria and submission of required documents every year?
Conclusion
Life insurance is an integral part of financial planning for an NRI living in Saudi Arabia. Over the years, life insurance plans in India have gone through several changes to combine the benefits of both worlds: insurance and investment. These plans are designed to ensure that the financial needs of dependents in India are easily met. While purchasing life insurance in India as an NRI is a seamless process, it is essential to carefully select the plan that suits you best.
FAQs
How can NRIs use life insurance to support their children’s education in India?
NRIs can utilise life insurance plans, such as ULIPs or child insurance plans, to accumulate a substantial corpus to support their children’s education in India. Opting for riders like waiver of premium rider is a smart move as well.
How can life insurance for NRIs help in wealth accumulation?
Life insurance plans in India for NRIs, such as ULIPs, Endowment, and Money Back plans, now allow for combining insurance with investment and savings. Such plans are worth exploring to accumulate wealth in the long run.
