Buying Life Insurance in India? Here’s What You Need to Know
Even as an NRI or a PIO, it is possible to purchase a life insurance plan in India and get suitable coverage. With the increasing popularity of term insurance for NRIs, many insurance providers have started to offer personalised plans to meet the needs of Non-Resident Indians. So, there’s really nothing stopping you from opting for an insurance plan and enjoying the best coverage. Before you begin shortlisting reputable insurers, continue reading to know some crucial aspects to consider while choosing life insurance as an NRI.
- Know the eligibility criteria
As a Non-Resident Indian (NRI) or a Person of Indian Origin (PIO), you can easily purchase a life insurance policy in India if you satisfy certain criteria. If you are an NRI, then you must hold a valid Indian passport to opt for term insurance for NRI. In the case of a PIO, the following eligibility criteria should be met:
- The person should have held an Indian passport in the past
- Under the Citizenship Act, 1965, the person or their parents or grandparents were citizens of India
- The person is married to an Indian citizen
By meeting these eligibility criteria, you can get NRI life insurance to secure your loved ones from unfortunate mishaps.
- Check the medical examination requirements
While purchasing a life insurance policy as an NRI, you can complete the process online. However, when it comes to medical examination, you would have to check the requirements with your insurance provider. Usually, there are two options available for NRIs. One method is to travel to India to complete the medical exam, which will be paid for by the insurer. Another way is to complete the test abroad and send the report back to your insurance provider. In case you seek a company that specially offer NRI life insurance, then they might have tie-ups with medical facilities abroad. This shall make it easier for you to complete your medical examination.
- Understand the premium payment method
As you live overseas, it is recommended to check with your insurance provider and understand the premium payment method. This shall help you avoid any last-minute issues due to bank accounts. You can make premium payments via the Non-Resident Ordinary (NRO) account in rupees currency. This is suitable when you have family in India who can manage your payments via Indian banks. While Non-Resident External (NRE) account and Foreign Currency Non-Resident (FCNR) account can be used to make payments in foreign currency.
- Learn the maturity or death benefit terms
Though insurance providers cover the death of the policyholder overseas, it is recommended to go through the exclusions carefully. Most insurance plans have terms and conditions that specify the coverage. Therefore, you must be aware of the inclusions and coverage policies of the plan. The death and maturity payouts are repatriable to the extent of the premium you paid in foreign currency to the total premium paid. Similar to standard life insurance plans, the nominee of the policy has to submit certain documents to claim the death or the maturity benefit.
- Consider taxation
A crucial aspect involved in purchasing an insurance policy as an NRI is the taxation terms for the said plan. In India, the premiums, death and maturity payout can be claimed as a deduction for tax savings. However, the tax law may differ in your country of residence. Thus, you can either understand the tax applicable on your insurance policy bought in India. Another method is to seek professional help to learn about taxes and plan better.
With this, you are now aware of what is term insurance for NRIs and how you can purchase one. After considering the above-mentioned pointers, you can easily reap the benefits from your insurance policy.
