NRIs and PIOs need to be aware of several criteria that can affect the premiums and benefits provided by their life insurance policy.
Are you an NRI (Non-Resident Indian) or a PIO (Person of Indian Origin) looking to buy insurance in India? Thanks to the Foreign Exchange Management Act, you actually can. Numerous insurance providers have developed specialised products that NRIs and PIOs may find interesting.
Continue reading this article to learn about the implications, benefits, and application processes for the various life insurance products available in the Indian market.
Factors NRIs need to consider before buying life insurance in India.
NRIs and PIOs need to be aware of several criteria that can affect the premiums and benefits provided by their life insurance policy.
Eligibility
An NRI is a person who has resided outside of India for a specific amount of time. Meanwhile, a person from any other country—aside from Pakistan or Bangladesh—is considered a PIO, provided the following criteria are met:
- At some point in your life, you have held an Indian passport.
- You, your parents, or your grandparents have been Indian citizens under the Citizenship Act of 1965.
- Your spouse is an Indian national.
Suppose you’re a PIO and you match the abovementioned criteria. Then, you can apply to get life insurance in India. However, a life insurance plan for NRI can be purchased by any non-resident Indian if they hold a current Indian passport.
The Medical Exam
It is optional for you to be present physically in India to purchase your life insurance policy. Also, your absence will not affect the transaction in any way. There are typically two ways to give the medical test.
- You travel to India and get your medical test done. Your insurer may or may not cover the costs, so double-check with your insurer before opting for this option. This is usually quite rare.
- You can undergo the medical examination overseas and send the test reports to the insurance provider you are considering. Life insurance policy companies in India may collaborate with their counterparts overseas in some circumstances if the insurance is designed specifically for NRIs.
Premium Amount or Cost
Suppose you reside in one of the High-Risk Countries (a term used by life insurance policy issuers for nations that are prone to an excessive level of political instability), you would pose a more significant risk to the insurer. You may, therefore, be required to pay a higher premium amount. However, your premium amount would typically be significantly lower if you reside in a nation with lesser or no political unrest.
Payment of a Premium
Many times, people living abroad have relatives here in their home country. Since these relatives are in India, they can keep an eye on things and make sure the premium payments are managed through Indian banks. The premium for any life insurance plan for NRIs can be paid using an NRE or Foreign Currency Non-Repatriable (FCNR) account. An NRI policyholder can also make the premium payment via a Non-Resident Ordinary (NRO) type account. It is to be noted that the premium can be paid from an NRE or FCNR account only if the life insurance plan is bought in foreign currency. A life insurance calculator should give you a fair idea of your premium amount.
Benefits upon Maturity or Death
NRIs and POIs who purchase a life insurance policy from Indian insurance companies receive policy benefits regardless of where they are located at the time of their demise. The insurer will give the death benefit to the nominee in rupees or in the currency of the country where they reside. The nominee would have to file the required paperwork in accordance with the conditions of the policy, just like with a standard life insurance policy.
Do NRIs and PIOs need to get life insurance in India?
A life insurance policy can protect dependents in your absence at various phases of life, especially after your demise when your family will require financial support. NRIs can use life insurance policies in India to cover their loved ones in the event of unforeseen circumstances.
Naturally, given your circumstances in life, you would need to comprehend the advantages that various policies would have for you. Before finalising your decision, you would also need to compare the different life insurance policies that Indian insurance firms are currently offering. It is easy to know the best premium amount options available using their life insurance calculator.
