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Buying Term Insurance in Australia and Canada as an NRI: What You Must Know
In a more globalized world today, Non-Resident Indians (NRIs) are not only finding jobs and settling overseas but also taking proactive steps to create a solid financial safety net for themselves and their families. Of all the different financial instruments, term insurance is an important one for providing life coverage at a relatively low cost. For NRIs in industrialised nations such as Australia and Canada, purchasing term insurance either in their adopted home country or back in India has some different considerations.
Why NRIs Need Term Insurance More Than Ever
Term insurance is a pure protection policy that provides a large sum assured for comparatively low premiums. A sudden demise of the breadwinner in a family leaves dependents in a financially ruinous state, particularly when they are bearing expenses in costly nations such as Canada or Australia. Term insurance ensures such risk by providing financial security.
For NRIs, term insurance has several uses:
- Financial security for the family in India
- Repayment guarantee for overseas loans and mortgages
- Estate and inheritance planning
- Peace of mind, even being far from home
Knowing the Territory: Term Insurance in Australia Compared to Canada
Insurance Regulation and Availability
Australia: Term insurance in Australia is generally provided as part of the more general “life insurance” policy, under regulation by the Australian Prudential Regulation Authority (APRA). Policies are frequently incorporated into superannuation accounts (pension savings), with automatic cover. Separate policies are also available from insurers and brokers.
Term life insurance in Canada is overseen by the provincial regulators and the Office of the Superintendent of Financial Institutions (OSFI). Canadian insurers provide multiple term insurance plans with 10- to 30-year terms, renewable and convertible to permanent policies.
Key Insight: Although both nations provide robust regulatory protection, term insurance can be more tailored in Canada, while in Australia, it is often tied to retirement benefits unless elected separately.
Can NRIs Purchase Term Insurance in Australia and Canada?
Yes, legal residents of these nations, including NRIs, can purchase term insurance from local insurers, subject to meeting the eligibility conditions such as:
- Valid visa/residency permit
- Proof of income
- Health check-ups as necessary
- Disclosure of overseas assets and liabilities
Nevertheless, several NRIs also prefer purchasing term insurance in India from Indian insurance companies, particularly if dependents are residing in India or if they are likely to come back in the future. This, then, brings forth a critical question: whether NRIs should purchase term insurance in India or overseas?
NRI Term Insurance in Australia: Major Factors to Consider
When considering NRI term insurance Australia, take into account:
- Premium Charges: Local underwriting requirements and healthcare prices in Australia might result in more expensive premiums for Australian term plans compared to Indian policies.
- Currency Consideration: Convenience in terms of payment in AUD can be offset by the effect of currency fluctuations on affordability in the long term.
- Claim Settlement Venue: Claim settlement may be delayed if the nominee is in India unless facilitated through cross-country claim assistance services.
- Taxation: In Australia, life insurance premiums do not qualify for personal policy tax deductions. The death benefit, on the other hand, is typically tax-free for dependents.
Pro Tip: If you have a live superannuation account, see if it has a life cover element, which could be an affordable option.
NRI Term Insurance in Canada: Key Considerations
For NRIs living in Canada, NRI investment plans Canada usually accompany life protection. Here is what you need to know:
- Low Premiums: Canadian term policies are competitively priced and provide strong coverage.
- Renewability and Convertibility: Most policies provide for conversion to whole life policies at no medical exam.
- Tax Implications: Death benefits of life insurance are mostly tax-free, but premiums are not tax-deductible.
- Integration with Financial Planning: Term insurance in Canada is usually part of broader NRI investment strategies Canadian citizens embrace to cover risk and growth.
Expert Tip: NRIs in Canada are advised to purchase policies early because premiums are much lower when age and health risks are low.
Selecting Term Insurance in India vs. Foreign
| Factor | India | Australia/Canada |
|---|---|---|
| Premium Cost | Premiums are lower. | Premiums are relatively higher. |
| Currency | Payments and benefits in Indian Rupees (INR). | Payments and benefits in local currency (AUD/CAD). |
| Claim Process | Simpler if your nominees are residents in India. | Simpler if your family or nominees are in the country of residence. |
| Tax Benefits | Eligible for tax deductions under Section 80C and tax-free benefits under Section 10(10D). | Premiums are not tax-deductible, but death benefits are typically tax-free. |
| Duration Flexibility | Policies may cover up to 85 or even 99 years of age. | Tenure lengths usually range between 10 and 30 years. |
| Best for NRIs | Useful for NRIs with financial dependents in India. | Preferable for NRIs with liabilities outside India or those settling permanently in Australia/Canada. |
Conclusion
Whether you prefer to purchase NRI term insurance in Australia or go for a plan in India, the most important thing is to match the policy to your family and individual requirements. Similarly, for NRIs in Canada, incorporating term insurance in NRI investment schemes in Canada not only protects your family’s future but also makes your long-term financial planning stronger.
Protection is not merely a matter of covering risk; it’s being wise enough to plan with clarity. And for NRIs, that means having a term insurance policy that goes with them wherever life goes, grows with their aspirations, and protects their loved ones, wherever life may lead them.