There are some misconceptions about buying life insurance policies for Non-Residents Indians (NRIs). Several of them believe it is difficult to buy the policy from an Indian insurer, though some may now know how to proceed.
As we all know, life is full of uncertainties, and having adequate life insurance coverage—regardless of where one lives—provides relief to family members.
Despite the fact that there are some factors to consider when purchasing the policy, we hope to demystify some key points for NRIs looking to purchase insurance coverage themselves in this article.
How can NRIs buy life insurance policies?
Indian insurers provide life insurance policies to NRIs residing in any nation. The Foreign Currency Management Act (FEMA) permits NRIs and People of Indian Origin (PIOs) to purchase insurance policies that fit their needs for family protection.
It is not essential for policyholders to reside in India in order to purchase a coverage from Indian life insurance firms. Nonetheless, there may be insurers that need you to remain in India when purchasing the coverage. One of the best and most convenient ways for NRIs to get an insurance is online, where they may compare the policy's features and premium rate before purchasing it.
One of the advantages of acquiring an insurance in India is that insurers would pay for policyholders to undertake the requisite medical examinations.
Alternatively, if the policy is purchased from the opposite side of the world, the policyholder must provide all medical records to the insurer, which may not be paid or reimbursed.
In addition, policyholders must understand that premium rates are entirely dependent on their nation of residence. If policyholders reside in high-risk zones, their premiums would be higher, or they would be denied coverage altogether. On the other hand, policyholders residing in nations rated as low risk may obtain the policy without difficulty. High-risk countries have unstable governments and are more likely to experience civil wars or constant violent attacks on their citizens.
There are numerous insurers in the country, each with advantages and disadvantages. One should exercise caution when selecting an insurance company. Before purchasing a policy, policyholders should review its exclusions and inclusions.
Another important consideration is the taxation of life insurance policies. Investment accumulation and maturities are tax-free in India under the current tax regime. However, when purchasing a policy, one must consider the taxation of the country in which they reside.
Premiums can be paid in foreign currency or through an NRO bank account, a Non-Resident (External) Rupee Account (NRE Account), or a Foreign Currency Non-Resident (Bank) Account (NRE or FCNR). The policy documents specify whether premiums should be paid in Indian or foreign currency.
If the life insurance policy is issued in a foreign currency, the premiums must be paid in the same currency from an NRE or FCNR account. Premiums will be paid through an NRO account if the policy is issued in Indian rupees. Final maturities, like premiums, will be made in the currency specified in the policy documents.
The nominee would be required to submit all relevant documents mentioned in the policy documents when filing the death claims. One of the most important things to remember is that if a death occurs in another country, some insurers will require a death certificate attested by the Indian embassy or high commission in that country.
Rakesh Goyal is the Director of Probus Insurance, an InsurTech broking company selling both life and non-life insurance policies.
