In this age of globalization, settling overseas is getting more and more common. You may need to relocate to a foreign country due to your job, business or higher studies. Though you are now a non-resident Indian but you may have left behind your family, parents and other responsibilities or have plans to return to your homeland soon.
If such is the case you may choose to buy life insurance plans in India from abroad. Every Indian and non-resident Indian holds similar facilities and benefits when it comes to insurance cover. Both health cover and life insurance for NRIs can be bought in India from overseas.
Are NRIs Eligible to Buy Insurance Policies in India?
No matter whether you live in India or in abroad, your NRI status will not hinder you from buying insurance policies in India. Here are the eligibility criteria for NRIs. Check out who can buy insurance policies in India:
- A person who owned Indian passport at any point of time.
- An individual who used to be the citizen of Indian according to the Citizenship Act of India, 1955.
- A person, whose parents or grandparents were Indian citizen according to the Citizenship Act of India.
- An individual who has married an Indian citizen.
If you fulfill any of the above stated conditions you are eligible to purchase policies in India. Moreover, if you have the following documents with you, you are eligible to buy life insurance for NRIs in India from any part of the world:
- Valid Passport issued by Government of India
- Other valid proofs of residence
Things to Consider While Purchasing Life Insurance for NRIs in India
Though you can have insurance policies from Indian insurer, you should reconsider the fact whether buying policies in India is beneficial for you. It is true that you can manage your policies from Indian insurer from abroad but you need to ponder up on it pragmatically. NRIs purchase insurance plans in India mostly due to four reasons:
- When they are staying in abroad just for a limited span of time.
- When they are soon returning to India.
- When they have parents in India.
- For building up wealth in India for future plans.
If you have figured out your own reason to buy policies in India, here are a few things you should consider while purchasing life insurance for NRIs in India:
- Insurance Company – Once you have all the valid documents supporting NRI eligibility, you may proceed to select your desired insurance company because not all insurance companies provide life insurance for NRIs. Before selecting an insurer, you should go through their terms regarding NRI clients.
- Geographical Location – While purchasing NRI life insurance cover in India, you should go through the terms and conditions of the insurance company thoroughly. Many insurance companies may demand bodily presence of the policy proposer while selling the life insurance for NRIs to an Indian non-resident. In that case, you may choose to buy policy during your visit to India.
- Policy Under writings – It is extremely important that you should read the guidelines of the insurance company regarding NRI client in depth. Ensure complete understanding of the terms and policies for NRIs before signing any final documents. Although similar benefits and facilities are provided by the insurers to both resident and non-resident Indians, terms and clauses for NRI applicants may differ from those of residents of India. This is because greater risks are associated with NRI applicants. So, the insurance companies, usually, put greater restriction on NRI applications and also limit their sum assured.
- Health Screening – If you intend to buy life insurance for NRIs, you should consider knowing the medical and health screening process beforehand. The companies usually demands for medical test reports before providing insurance cover. Make sure if your insurance company is ready to accept health reports from abroad. Moreover, if medical screening is done in India, all expenses are included within the policy but in abroad insurance will not take care of your medical screening expenses.
- Mode of Payment – Check thoroughly the modes of payments provided by the insurance company. Usually, NRIs can pay through foreign currency or NRE account and if that is not acceptable by the insurer then you may pay via NRO bank account. The important thing to understand here is that the premium payment made in Indian currency will not be repatriated abroad.
- Premium Rate – NRIs pay same as Indian residents to avail same range of insurance cover. Insurance premium rates are not higher for NRIs. However, there could be a hike in premium rate of life insurance for NRIs if the insured NRI lives in any high life threatening countries.
- FEMA Regulations – Go through the Foreign Exchange Management Act norms before investing in insurance products in India. This regulatory body instructs rules and regulations of insurance policies which are purchased inside or outside the country.
- NRI Tax Benefits–NRIs also enjoy similar tax benefits on insurance policy premiums and maturity and death benefit amounts as the Indian residents. You can avail up to ₹ 1lakh and 50 thousand under Sec 80C of Indian IT Act on purchasing life insurance for NRIs. Tax deduction of ₹25 thousand can be availed by the Insured NRI under the norms of Sec 80D on purchasing medical insurance products in India.
However, you should also consider a few more things if you have any of the following conditions:
- An NRI who has plans to return India in next 4/5yrs should go for investing in insurance policies in the current country of residence. 4/5yrs is a long time to stay invested in India.
- An individual who plans to return India within 2/3 yrs can plan to buy insurance in India. But remember not to buy the insurance plan from abroad. Try to buy the policy during your visit to India to avoid the complication associated with the life insurance for NRIs. This will make things easier when you will be back in India.
- An individual who has policies in India but relocating to abroad for a limited time span should continue with their existing insurances in India although you may need to buy insurance cover in abroad separately.