Life Insurance for NRI: Can Non-Resident Indians buy life insurance plans in India?

In the context of Indian lifestyle, life insurance remains one of the most common and prevalent financial schemes that citizens invest in. And the best part is that it’s not just Indians who reside in India see the need to invest in life insurance. Indians well settled in a foreign land also understand the importance of life insurance to protect the financial needs of their family members.

Building on this principle, the Foreign Exchange Management Act (FEMA) has enabled Non-Resident Indians (NRIs) as well as people of Indian Origin (PIOs) to purchase term insurance plans in India. If you are an NRI and are looking for an affordable protection plan from India, there are now some interesting plans offered by insurers. You can buy term insurance plans at premiums that are one of the cheapest in the world which basis your needs.

While an NRI is legislatively permitted to invest in Indian term insurance plans, it’s important to first understand the process of enrolling into such plans and why it’s a good idea for you to make such a move. Here are some of the factors are worth studying while deciding:

Does the NRI have to be present in India at the time of buying the policy?

Not necessarily, although it may differ from company to company. The best way to go about buying a life insurance for an NRI is going online. That way, you can compare all available options to find the best plan and buy it instantly from the comfort of your current residence.

However, there may be certain additional costs in such cases. For instance, if you purchase the policy from abroad, you would have to do the medical examination and send the report to the insurance company in India. However, if you are present in India at the time of buying the policy, the insurer can conduct the required medical check-ups.

Also, now a lot of insurance companies conduct tele-medical exam for the comfort of NRIs.

How to pay premiums for the policy?

Since we have already established that people working outside of India generally have their families (can be just spouse or parents) still living in India, it’s fair to say that their family can manage the continuity of the insurance plan smoothly through their already existing local bank accounts and tie-ups with insurers while the main policy holder can reside internationally.

Even in the few cases when an NRI or a PIO would prefer managing the premiums at their own end, the premium for your life insurance policy can be paid by remittance in foreign currency or through an NRO bank account or NRE/FCNR bank account. If the life insurance policy is issued in a foreign currency, the premiums will have to be paid from an NRE or FCNR account. If denominated in rupee, it will be through an NRO account.

What are the rules regarding death and maturity proceeds?

If an NRI has purchased a life insurance policy from an insurer in India, the policy is bound to cover death, irrespective of the country where the event occurs. The death benefit paid to the beneficiaries of the policyholder is in the currency specified in the policy document i.e. either in Indian Rupee or any other foreign currency. In order to make a death claim, the nominee needs to submit all the documents as mentioned in the policy terms. One must learn that the list of documents required may vary from one insurer to another.

Should an NRI buy life insurance in India?

Having seen the rules and regulations of buying life insurance in India, it is important for NRIs to evaluate if they should indeed buy life insurance in India. There are a few things to consider here:

Secure families in India - Generally, millennials look for new job opportunities with the objective of getting international work exposure while their families stick around in India managing their assets locally and continuing with their lives. With this model, it has become more important for NRIs to secure their families in India through a local life insurance plan that can safeguard their families from unplanned exigencies.

We all can agree that life insurance has emerged as one of the key investments that provides a shelter of safety on one’s family members and dependents. There are multiple high expenditure milestones in each one’s lives for which they save their finances and in case of sudden loss of the bread earner of the family, the savings plan can go for toss while also creating uncertainty of the future. So, it’s best to plan for this risk via a term life insurance scheme.

Local intelligence – The family members are also the source of intelligence about the plethora of new plans and new amendments to existing insurance plans that are always upcoming in India. It’s easy for them to enhance their selections with time as there are new updates. It’s also easy for them to communicate with the insurance providers in India to discuss new opportunities. Also, for people earning in a stronger currency than INR, the premium amount becomes a small share of their overall earnings. This is one of the reasons why a life insurance plan in India is the cost optimum investment for NRIs or PIOs.

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