Why Indian students pursuing higher education abroad need life insurance

Should students with dependents or loans buy life insurance before flying out of India?

The number of Indian students opting to pursue higher education abroad is rising. Around one million students leave their homes each year to pursue their academic dreams overseas with most opting for countries like the US, Canada, Australia, the UAE and the UK.

However, the move abroad can be expensive and most students typically avail an education loan to meet their college expenses. In FY22, public sector banks alone disbursed education loans worth over Rs 7,500 crore for students studying abroad.

Many also decide to pursue their master’s abroad after getting married or taking a career break. This brings to the fore the importance of having a life insurance policy on your checklist before you decide to move overseas.

In the unfortunate event of a loss of life while studying abroad, a life insurance cover can not only ensure that expenses related to your education loan is taken care of but also safeguard all future financial needs of your dependent parents or spouse.

Unlike a travel insurance policy that covers hospitalisation expenses, flight and baggage delays and other defined losses caused by study interruption, a life insurance policy offers much-needed financial support to family members in the unfortunate scenario of the insured’s death. While not mandatory for admission or visa-related processing, purchasing an adequate life insurance cover at an early age will hand you the advantage of lower premiums that will then stay constant for life.

As the entry age increases, the applicable annual premium for the same sum assured is prone to be higher, largely to compensate for increased mortality risks. Moreover, as long as premiums are paid as per the stipulated and agreed frequency, the policyholder is assured comprehensive life protection irrespective of whether they reside in India or abroad.

When purchasing life insurance cover in India, students need not contend with expensive diagnostic procedures that may be necessary in case of buying a similar policy in a foreign country. This implies less hassles in protecting one’s loved ones from the vagaries of life and complete peace of mind for students who have assumed substantial financial liabilities to fund their studies abroad. Claim settlement through Indian life insurance policies tends to be smoother.

The insured amount should be decided based on existing liabilities, student loan obligations and other expenses that would need to be incurred by the insured’s family members in his/her absence. Students should include life insurance when calculating the overall costs involved in studying abroad and ensure they can protect their loved ones with a sizeable sum assured that is commensurate with the quantum of financial responsibilities shouldered by them.

Before deciding on a particular insurer or the type of life insurance product to be purchased, one should conduct some preliminary research and check existing customer reviews to aid in the decision-making process. One should also check additional riders or coverages for critical illness, terminal illness, accidental death, accidental total or permanent disability etc provided by various insurers and opt for them to get additional coverage for situations other than death. The benefit of such riders may not necessarily be available with insurance policies offered overseas.

Aspects such as the claims settlement ratio, extent of coverage provided, payment terms and other conditions should be read through thoroughly before making the final purchase.

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