In this article, we will talk about planning for planning and Term Life Insurance for NRIs
Term life insurance can help you bridge that gap for decades at a relatively low cost. If you die while the policy is in force, you’ll leave behind a lump sum of cash for whomever you choose.
The meaning of the term life insurance is in its name—it covers its policyholders for a certain amount of time—a certain term. It costs much less (except for the very elderly) than much permanent life insurance and can be covered in two types of premiums: Level-term and Annual renewable. The premiums of level-term stay the same throughout the duration of the policy and can usually be purchased in terms of up to 30 years; however, Annual renewable premiums increase as the policyholder gets older.
How much does term life insurance cost?
The cost of a term life insurance policy depends on a number of factors, including:
- Age. Younger people qualify for lower premiums because they are less likely to die in the near-term.
- Health. Many insurers require you to take a medical exam and answer health questions. Poor health can mean higher premiums.
- Gender. Men typically die at younger ages than women, so men often pay more for life insurance.
- Face Value. Higher the face value (death benefit), the higher the premium
- Riders. There are few carriers that provide living benefit riders at an additional cost.
There are many reasons why NRI families take term insurance. Some of them are here:
- College education for kids
- Mortgage for homes
- Income replacement
- Business continuity
A Real-Life Example
Thirty-year-old Manish Joshi is in the USA on H1B. He is the primary breadwinner and wants to protect his family in the unlikely event of his early death. First, he buys a $500,000 10-year term life insurance policy with a premium of $50 per month. If Manish dies in the 10-year term, the policy will pay Manish’s beneficiary $500,000. Next, he realizes that if he dies after he turns 40 when the policy has expired, his beneficiary will receive no benefit. If he renews the policy, the premiums will be higher than with his initial policy because they will be based on his age of 40 instead of 30.
If Manish is diagnosed with a terminal illness or critical illness during the first policy term, then he likely will not be eligible to renew once that policy expires. Some policies do offer guaranteed re-insurability (without proof of insurability), but such features, when available, tend to make the policy cost more.
We have been serving NRIs from many states with Life insurance solutions. As we have access to multiple companies, We are here to suggest reputable, financially stable life insurance companies to meet your personal financial needs. There are different types of Insurance that are suitable for different needs. Term Life Insurance for NRIs, Whole Life Insurance for NRIs, Universal Life Insurance for NRIs, Indexed Universal Life Insurance and Long Term Care Insurance for NRIs are some of them. Know more about Term Insurance Vs Permanent Insurance and Features of Cash Value Life Insurance Policy in Financial Planning.