Health insurance for NRIs in India

Indians residing abroad often make frequent trips to home for health check-ups, treatments or surgeries; attracted by the presence of qualified doctors, cheaper treatments and in some cases reduced paperwork. Indians from North America, UK and the Gulf countries, find it easier to come for treatment to India instead of struggling with insurance policies and long waiting periods in government centres in their countries of residence.

India’s medical establishment is working towards attracting NRIs and PIOs with better facilities, easier payment options and the choice of modern and traditional medicines. As a result, India is also fast becoming a competitive market for insurance companies who are focusing on NRIs with multiple plans and easy premiums. NRIs and PIOs who are planning to eventually return to India are also buying health insurance in their home country.

However, before buying a health insurance, there are a few things an NRI should know about health insurance in India, which are:

Treatment

Since treatment abroad is expensive, some companies may not provide overseas coverage. Their policies may require you to come to India for treatment. However, others which provide for international medical consultation and treatment have high sum assured plans and cover only select illnesses; these can vary from treatment for cancer, organ transplant, brain tumour, etc.

Paperwork

You buy a policy when you are in India, and complete the paperwork or apply online and do the paperwork overseas through a written correspondence. In the latter case, you have to bear the additional costs of medical tests in your resident country and sending the report to India.

Premiums

You have to pay premiums either through the form of a remittance in a foreign currency, or an NRO/NRE/FCNR bank account.

Coverage

The sum assured may be capped vis-à-vis a resident Indian, if you choose to carry out treatment abroad, but the cover will be higher if you are comfortable with coming to India.

Also, when deciding the insurance amount, keep in mind the city you will be settling down in, and the cost of living there. You should buy a floater plan if you have a family.

Claim Payout

As per Foreign Exchange Management Act rules, you can repatriate the claim or maturity payout to the extent of the premium paid in the foreign currency. In case premiums are paid in Indian currency through an NRO account, then maturity proceeds cannot be repatriated.

When to buy

If you are planning on returning to India, buy your policy around 3-4 years before your return. This will ensure that the mandatory waiting period for the policy is over, and you are well protected when you return. If there are no immediate plans to return, then take an insurance policy in your country of residence. And if you have bought a policy in India before you became an NRI, and have plans to return soon, then continue to hold on to it.

Tax benefits

In India, benefits from health insurance are tax-free but bonuses and, in certain cases, withdrawals may be taxed. Under the Income Tax Act, an NRI can claim the same tax benefits as a resident Indian. As per Section 80D, the premium paid towards the policy for self, spouse, children or parents qualify for tax rebate. You can claim a Rs 25,000 deduction for yourself and Rs 25,000 for your parents. If you are a senior citizen, you can claim a deduction of up to Rs 30,000.

It is important that you also check the tax laws of your country of residence, because you have to pay tax based on your global income in that country.