Life insurance for NRIs

Under the Foreign Exchange Management Act (FEMA), Non-Resident Indians (NRIs) as well as People of Indian Origin (PIOs), can buy a life insurance plan in India. So, if you are an NRI or PIO and are looking to purchase an affordable protection plan in India. Then, you need to be aware of the following things before proceeding with the life insurance policy purchase-

Check your eligibility

A Non-Resident Indian will be eligible to get a life cover if he/she holds a valid passport issued by the Government of India and temporarily resides in the country of his / her present residence. A person of Indian origin/ overseas citizen of India can get life insurance only if:

  • He/she has held an Indian passport anytime in the past.
  • He or either of his parents or grandparents were a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
  • The person is a spouse of an Indian citizen or a person referred to in sub-clauses above (a and b).

Cost of premiums

Usually, the premium costs are similar for both the residents as well as non-residents. However, the premium of the policy might vary depending on the applicant’s country of residence, i.e. the premiums will be high for high-risk countries and less for low-risk countries.

Note: High-risk countries are those countries that are more prone to civil or military issues and are run by an unstable government and face constant violent attacks. Low-risk countries are those countries that are peaceful and are run by a stable government along with proper law and order.

Mode of payment of premiums

  • Checking the premium payment methods of the policy beforehand is important to avoid any confusion later. There are two methods of premium payments-
  • Paying the premiums in rupees using NRO accounts (for rupee-denominated policies).
  • Paying in foreign currency or through NRE/FCNR account (for foreign currency denominated policies).

Know about tax regulations

Before buying a policy in India, it is significant for the applicants to go through the tax laws for both India as well as the resident country. Policy buyers need to check for tax implications at all three stages of policy life cycle i.e. investment, accumulation, and maturity. It is important to do so because the tax regulations differ from country to country. So, you need to find out the tax regulations in the country of your residence to make an informed decision.

Know about the medical examination procedure

Buying a life insurance plan means, you need to go through several medical examinations. There are two ways in which the medical examination procedure could be conducted:

  • Either you come to India, wherein the expenses would be borne by your insurer, or
  • You can do the medical examination at your resident country and send the reports to the insurer in India. However, in this case, you would have to bear the cost unless you have opted for a policy that is targeted specifically for non-residents.

Once you are aware of all the rules and regulations, you can look for the best life insurance policy that is suitable as per your requirements.