How to Choose Term Insurance as an NRI?

2024-08-02

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Charting in the unknown territory is just half the fun in the expat life. The experience lives with you forever and can turn you into a better version of yourself. The challenges of expat life could be overwhelming at times. However, smart financial management can ease much of the journey.

Securing a term insurance cover for yourself is one of the primary financial management steps for you as an NRI. Term insurance plan is a part of your contingency plan and helps secure your family financially.

Buying a term plan as a Non-Resident Indian is similar to buying the plan as a resident. However, you do have more options to secure the cover. Here’s how you can go about selecting and buying a term life insurance:

1. Online Presence

Ensure that you can get sufficient information about the plan, insurer and service channels online, through the insurer’s website. This will be your only direct connection with the insurer from your country of residence.

Also, an online presence is not limited to the information. The insurer’s website should allow you to buy and manage your policy online.

2. Claim Settlement Ratio

Insurers need to have strong underwriting teams and knowledge to process claims faster. Nowadays insurers increasingly rely on technology to achieve maximum efficiency in underwriting and claim processing

Claim settlement ratio (CSR) is an important factor for life insurance companies, as it represents two very important performance factors about them:

Quality of insurer’s operations
Speed of claim settlement

The ratio indicates how many claims the insurer could settle in the last financial year out of every 100 claim applications received. A good claim settlement ratio will mean your family can receive quick assistance in the times of need.

You can consider a CSR above 95% a good ratio, but the best insurers easily cross 98% now.

3. Claim Settlement Process

The real deal of a life insurance plan only occurs at the time of claim. The better the claim settlement process of the insurer the more comfortable your family will be in the time of grief.

The first thing to notice is whether the process has been explained clearly on the insurer’s website. This is perhaps the first place your family will check for the process and instructions. Second, you should see if they can file the claim from a foreign country. This means the claim settlement process should also be online for the insurer.

Ultimately, you need to ensure that your dependents will not have to run from pillar to post to receive the financial aid you had secured for them.

4. Persistency Ratio

Persistency ratio is the stamp of reality on the real value of the insurer among the present customers. This ratio indicates how many customers stay with the insurer over the years. Obviously, as a customer, you stay only with the brands you are satisfied with, to say the least.

Persistency ratio is often estimated for specific months (basically the next policy year). For example, 13th-month persistency ratio is the indicator of premium receipt for the next policy year. The best insurers may clock more than 80% as of 13th-month ratio. The ratio, however, falls as you increase the years.

5. Limited Premium Payment Option

However, multiple other factors count too, considering you will not want the policy to lapse. The best term insurance providers employ methods to automate the premium payment.

You can also use the limited premium payment term option to pay the entire premium in a short period. This option is best for those NRIs who intend to return after a few years in a foreign land.

So, for example, if you expect the NRI stint to last only five years, you can limit your premium payment term to just five years. Your NRI term plan will continue with all the benefits until intended maturity.

6. Premium Payment Options (Rupee & Foreign Currency Payments)

Indian insurers are expected to conduct business in the domestic currency only. However, you can remit directly to the insurer’s bank account if the insurer permits. Once you are abroad this facility will be very useful for you.

Many life insurers do allow transactions in multiple foreign currencies. Also, you should note that to the extent you have paid premiums in foreign currency, the claim remittance is allowed in the foreign currency.

For example, if you have paid 50% of the total premiums in USD, your nominee can repatriate 50% of the claim amount to that currency. That is, of course, if your nominee is also an NRI.

Status of Canara HSBC Life as NRI Life Insurance Provider

Canara HSBC Life enjoys a strong position in the market with 99.23%^ claim settlement ratio. The insurer’s customer satisfaction record also speaks volumes with 81% persistency ratio in the 13th month and 50% for the 61st month.

Canara HSBC Life also provides almost all services online, so whether you are in the country or outside you can manage your policies. You can use electronic insurance account to store all your life insurance plans at one place and manage them securely from anywhere in the world.