Many Indians are settled in foreign countries, and they understand the importance of a Life Insurance policy as it provides financial security to the family in their absence. The Foreign Exchange Management Act (FEMA) has made it possible for non-resident Indians (NRIs) and people of Indian origin (PIOs) to purchase life insurance plans in India. Various insurance companies now offer a variety of customized term life insurance at low premiums. Also, it is one of the best ways to invest your money as it provides financial security to your family. So, suppose you are an NRI and looking to buy a life insurance policy in India. In this instance, you need to consider various factors while buying a life insurance policy in India.
Who are NRIs and PIOs?
Before we start to explain life insurance for NRI or non-resident Indians. We should know who NRIs are. An NRI is a person:-
- Lived in India for not more than 182 days during the previous year.
- Stays outside of India due to their job.
- Stays outside India for an unknown period of time.
- Stays outside India for business purposes or vacation.
People of Indian Origin (POI) are those who were born in India or have an Indian family. PIOs include those who live in other countries but are still Indian citizens and those who have Indian parents or grandparents.
If an NRI wants to buy a life insurance plan in India, they need to be present in the country at the time of purchase. If he is not present, the customer himself will have to undergo all the medical examinations and send the report to the insurer. In this instance, the NRI will have to bear the cost of medical examinations.
Eligibility Criteria for NRIs to Buy Life Insurance policy
Rules are different for NRIs to buy a life insurance policy. So, it is important to know the correct eligibility criteria before proceeding further. Below mentioned are the eligibility criteria for NRIs to buy life insurance plans;
- NRIs must have an Indian passport.
- Parents or Grandparents of NRI should be a citizen of India.
- Your spouse should be an Indian citizen.
Factors to be Considered by NRIs While Buying a Life Insurance Policy in India
Below mentioned are the factors that every NRI should consider while buying a life insurance policy:
- Choose your life insurance company wisely
Currently, 24 life insurance companies in India provide a wide range of life insurance policies. Finding the best life insurance company can be a very tedious task. So, always consider these factors such as claim settlement ratio, solvency ratio, and claim settlement process before opting for a life insurance company.
- Policy Cost
Policy cost is one of the important factors in health policy. It would be best if you always compare the cost of the policies offered by various life insurance companies in India, and it will help you determine the most cost-effective option and the one that best meets your needs.
- Medical Examination
NRIs don't need to be physically present in India to obtain life insurance, and your location won't affect the process. However, depending on which insurance company you are applying for, you may be required to travel to India for your medical examination. There are two options for doing the medical examination in most cases: one is to travel to India and give the examination here. Your insurer will bear the costs of the medical examination. The second option is to undergo a medical examination in your country and submit the test report to the insurance company to whom you are applying.
- Premium Payment Mode
NRIs can pay the policy premium via these modes:
- NRO Account or Non-Resident ordinary Account
- NRE Account or Non-Resident External Account
- FCNR Account or Foreign Currency Non-Repatriable
The benefits of life insurance policies vary from policy to policy. Some offer both death and maturity benefits, while others provide only death benefits. NRIs can buy life insurance from Indian insurance companies that will cover them, regardless of where they are at their death.
The amount of benefit received is determined by the type of policy chosen. The insurance benefit is paid in rupees or in the currency of the country where the NRI is currently residing. For that, you need to file a claim, and the insured/nominee has to submit the required documents. It is recommended that you and your nominee are well aware of the benefits of the policy and the claim process.
- Check the Company Reviews
Evaluating company reviews and market reputation is important before choosing a life insurance company. You can use public reviews and claim settlement ratio data from the past few years to choose whether you want to buy a term policy from a specific company.
- Tax Benefits
NRIs can claim a tax deduction under section 80C for premiums paid up to INR 1.5 lakhs per year if they file a return in India. If they have any income in India, such as interest, rental, or other sources, they can deduct it under section 80C of the Income Tax Act. According to Section 10(10D) of the Income Tax Act, the death and maturity benefits are tax-free.
NRIs can buy a life insurance policy in India that meets the needs of you and your family. You can choose life insurance based on your budget, and it has to meet your needs and requirement. You can also compare various "Best Life Insurance Plans in India" at D2C Insurance Broking Private Limited, (“RenewBuy”), which will help you find the best one for you.
Disclaimer: The information published in this article is for the reader′s reference only. The content of this information is to provide an overview of your life insurance needs and should not be relied upon for personal, medical, legal, or financial decisions; you should consult an appropriate professional for specific advice. The Company makes no representations about the suitability, reliability, timeliness, and accuracy of the information, services, or any other items mentioned on this subject for any purpose whatsoever.