Life Insurance For NRIs

Over 1,33 lakh Indian students have gone abroad to study as of March 2022. In 2020, about 7.15 lakh Indians went abroad for work, and in 2021, this number rose to 8.33 lakh. As of the end of July 2022, 13.02 lakh Indians have left to work abroad.

Many Indians who study abroad intend to return to their homelands after studying to spend the rest of their lives. While others work there for a few years to accumulate enough wealth before returning home.

No matter where you work or study, your heart will always want to protect your loved ones - and what can do that better than a life insurance policy?

But! Can NRIs buy life insurance in India?

Let’s find out –
 

Can NRIs Buy Life Insurance In India?

Yes. Non-resident Indians (NRIs) & People of Indian Origin (PIOs) can buy life insurance in India.

• NRI (Non-Resident Indians) -
  An NRI is someone who has lived outside the country for a certain period of time. An Indian passport is a mandatory requirement for Non-Resident Indians to buy life insurance in India.

• PIO (Person of Indian Origin) -
  Individuals from any country except Pakistan and Bangladesh qualify for PIO (Person of Indian Origin) status if they fulfil the following criteria -
  • The individual must have held an Indian passport at least once.
  • The individual or their parents or their grandparents have been citizens of India under the Citizenship Act, 1965.
  • The individual is a spouse of an Indian citizen.

Any PIO can apply for life insurance in India if they come under the above-mentioned categories.

The Foreign Exchange Management Act (FEMA) states that NRIs can buy any life insurance plan that covers the needs of their families, regardless of whether they live in India or not. Hence, geographical boundaries are not a barrier for NRI customers seeking life insurance plans in India.
 

Are They Required to Be in India to Buy Life Insurance?

It is not mandatory for them to be present in India, but this condition may vary from insurer to insurer.

Though not mandatory, being present in India while buying a life insurance plan is highly beneficial. If they are in India at the time of policy purchase, the insurer can administer the necessary medical check-ups. The cost of these medical check-ups is covered by the insurer. Purchasing a life insurance policy from their country of residence may require them to undergo medical check-ups there and then send the reports to their insurer in India. This will result in additional expenses for them.

Meanwhile, some insurance companies are currently setting up offices in major foreign countries, to assist with documentation, medical tests, and other formalities involved in buying a life insurance plan. Global presence, however, might take some time.
 

Factors That NRIs Need to Know for Purchasing Life Insurance in India

• Cost
  While determining the premium, life insurance companies are particularly concerned about the country of residence.

  Countries that have an unstable government, are prone to civil or military conflicts, and have frequent attacks on their citizens are classified as high-risk countries. Countries with a stable government, proper law and order situation, and a serene atmosphere are called low-risk countries.

  If NRIs are residing in a high-risk country, their application for life insurance might be rejected or a higher premium may be charged and if they are living in a low-risk country it might be approved easily.

• Premium Payment
  Insurers in India offer a variety of options for paying premiums for life insurance policies for NRIs.
  The premium can be paid via -
  • Non-resident ordinary nature account (NRO)
  • Non-resident external bank account (NNR)
  • Foreign currency non-repatriable account (FCNR)​​​​

NRIs need to check the currency in which the policy is issued.

In case a life insurance policy is issued to them in a foreign currency, the premiums will have to be paid in the denominated foreign currency from an NRE/FCNR account.

If the policy is issued in Indian rupees, the premiums will need to be paid through an NRO account.

• Payout Made By The Life Insurance Plan
  Just like premiums, the benefits from life insurance policies are also payable in the currency stated on the policy document, i.e., either in rupees or foreign currency.

As with any regular life insurance policy, NRIs or their nominee will have to submit the required documents in accordance with the terms of the policy to receive their claim payment.

In case of a death claim, the insurer will most likely ask for the original policy document, identification proof of the nominee, and the death certificate of the insured person, etc. Remember that if death occurs in a foreign country, the insurer will require a death certificate attested by the Indian embassy or High Commission of that country. An attestation is not required if death occurs in India.

• Tax Regulations
  Life insurance policies in India provide tax benefits on maturity and death benefits. However, taxation laws may differ from country to country. The payouts from life insurance policies may be taxable depending on the country of residence. Ensure that you are aware of the tax regulations in your country of residence before investing in any life insurance policy.
   

Wrapping Up!

Your most important priority, whether you're an Indian resident or an NRI, is to secure the financial future of your family. Life insurance understands this concern and offers coverage to every individual regardless of geographical location, including NRIs. Before you invest your hard-earned money, ensure you choose the right life insurance policy and also keep the factors mentioned above in mind.