What to Know Before Getting an NRI Life Insurance Plans

Mumbai (Maharashtra) [India] October 25: The Foreign Exchange Management Act has made it possible for those residing outside the country to buy a life insurance plan in India.  So even if you are a non-resident you can purchase a life insurance policy in the country and safeguard the financial interest of your family members. While the act has increased accessibility to insurance for NRI, it is on you to explore the features and scope of the policy. In this quest, you would first need to ask the basic questions about the NRI Life insurance plans. It will help you understand the scope of the protection plan and help you refine your research further and gain clarity about the basics.

Who Can Buy an NRI Life Insurance Plan?

As mentioned earlier, individuals who are non-resident Indians as well as Persons of Indian Origin living abroad can purchase NRI Life insurance plans. It is important to note that it is not mandatory for policy buyers to be present in the country to purchase the plan. However, some insurers may prefer your presence to streamline the process.

They may want to conduct in-person medical tests to assess your health condition. However, others could need you to share medical reports and other documents online. This is why you should check with the insurance companies beforehand and plan your insurance purchase accordingly.

How to Pay for an NRI Life Insurance Plan?

Non Resident Indians can pay NRI insurance plans through a choice of their mode. They have the option to pay a premium through -

• Foreign currency
• Non resident ordinary accounts at banks
• FCNR or NRE account

Before routing your payment, it is important to confirm the currency in which insurers issued the policy. Typically, Indian insurance companies issue NRI Life insurance plans in rupee or foreign currency when the non-resident or PIO is settled. Based on this information you would be required to pay the premium in the mentioned currency through the applicable NRE or FCNR account in India. If the policy is issued in Indian currency, you would be required to pay the applicable premium through your NRO account. Make sure to know the process, payment mode, and currency details beforehand to streamline the process.

Does the Country Residence Influence the Insurance Premium?

Life insurance premiums are mostly the same for residents and non residents of India. However, they may vary depending on variables that influence premiums and the country you reside in when buying the policy. To elaborate, just like your age, health status, occupation, and gender, your country of residence would influence your risk profile. Individuals who reside in countries that are facing increased geopolitical tensions, economic upheaval, or military disturbance have a riskier profile.

These nations are often flagged as high-risk locations by the insurers. They charge higher premiums to offset the risk of the NRI applicants. While you can assess the impact of variables like age, gender, occupation, health condition, sum assured, tenure, and lifestyle habits by using a premium calculator, you would need the help of the insurance providers to determine if your country of residence is deemed risky by them.

Based on the information you can continue to compare insurance plans and risk profiling of different insurers. This will help you understand what is insurance in simple words and its scope for NRIs.

How Can You Benefit from Purchasing an NRI Life Insurance in India?

NRI Life insurance plans accompany simple rules and fewer limitations. However, it is the key features and benefits that encourage NRIs to purchase a life insurance policy for nonresidents.

To begin with, the NRI Life insurance plan offers comprehensive coverage that can help you build a reliable safety net for your family members. The substantial amount would help you to safeguard their future and ensure their needs are well taken care of even in your absence.

To make the most of the plan, ensure that the cover you pick is adequate for your needs. To begin with, account for your family's current and anticipated expenses. In addition, add all your ongoing obligations and potential liabilities. Subsequently, factor in your family's financial goals and milestones where they could require additional support. An insight into these aspects would help you to understand the amount of money your family would require to meet the liabilities.

Next, you should find out if purchasing insurance in India would be cheaper than getting a cover plan abroad. Accordingly, you should focus your allocation towards a more suitable plan. In addition, you should note that insurance plans are eligible for tax benefits. Make it a point to find out which tax provisions would be applicable in your case and find out the process to claim them. This will help you save more on your investments and help modify your financial plan accordingly.

Maturity vs Death Proceeds - What NRIs Must Note

NRI life insurance plan would cover the policy buyer’s untimely death regardless of where the incident took place. However, such a clause would kick in only if the cause of the death is covered under the plan.

In the event of the death of the insured, the policy nominee is required to inform the insurance company about the incident. Subsequently, they must raise a claim and provide all required documents and proof.

Post verification, the insurance company would disburse the promised sum assured to the nominee either in Indian INR or foreign currency as mentioned in the policy document. It is recommended that you find out the provisions related to the transfer of proceeds to nominees residing in foreign locations. Typically, proceeds are not likely to be transferred to the nominee account, or the entire premium was paid in Indian currency through the NRO account. If the nominee moved out of the country after the policy was purchased the proceeds could be adjusted with the premium paid and transferred ahead. However, it would be best to sit with an insurance company agent and understand this aspect to know more about the process.

In these ways, NRI life insurance plans can benefit you. You should note that your choice of insurance provider and the plan would influence your experience significantly. Hence, compare the plan's scope and customer experience to make an informed decision.

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