NRIs Buying Life Insurance in India: Points to Ponder

1. Check Your Eligibility

NRIs and PIO are allowed to buy life insurance in India, subject to fulfillment of certain conditions. NRI refers to an Indian national resident abroad for certain duration, and PIO is a citizen of any country other than Bangladesh or Pakistan, if:

1)      the individual has held Indian passport, any time in the past

2)      the person or either parents or grand-parents were a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955

3)      the individual is a spouse of an Indian citizen or a person referred to in clauses 1 or 2.

If you are an NRI and want to purchase life insurance in India, you should have a valid passport issued by government of India. And for PIO, if you come under any of the above-mentioned categories then surely you can buy life insurance plan in India.

2. Choose Your Insurance Company  

As now you are eligible, the next step is to find a reliable insurer. There are over 23 life insurance companies offering a wide range of products to choose from. Consider factors such as the pedigree of the management, company’s claim settlement ratio, track record, and parent group’s experience. There are no specific policies offered by insurance companies for non-residents, but a few insurers have actually restructured their processes of issuing insurance policies to NRIs. They will help you with documentations and other requirements for medical tests, etc. Here’s the list of some of the companies who have managed to streamline their NRI centers:

 3. Gather Information About Taxation

• Before buying a policy, you are advised to take into consideration tax laws in force both in India and in the location where you are residing. Check for tax implications at all three stages of policy life cycle – investment, accumulation, and maturity. While current tax laws in India exempt all three stages from tax, make sure it is same in your country. Consult a specialist who can make you understand the tax related queries before buying life insurance in India.
• Insurance policies taken in India can be both affordable and comprehensive. Do evaluate your options vigilantly before selecting a life insurance plan to invest in! 

4. Identify Your Mode of Premium Payment

Check the premium payment methods of the policy in advance so that you don’t have to face any trouble later. There are two ways of premium payment; one is foreign currency-denominated policies in which you pay the premiums in foreign currency or through your NRE/FCNR account, and second is rupee denominated policies in which you pay premiums in rupees using NRO accounts.

Here’s the table showing comparison between NRE, NRO and FCNR accounts:

5. Know About Medical Examination Procedure

Buying a life insurance means, you have to go through medical examination. There are two ways to get it done. One is, you come to India and your insurer will bear the medical expenses, and second option is to do it overseas and send the report to the insurance company in India. In second case, you would have to bear the cost, unless you are buying a policy targeted specifically for non-residents, in which case, the insurer would have tied up with an overseas medical facility for the purpose.