A lot of NRIs often doubt if they can purchase a life insurance policy in India. As per the FEMA, NRIs can buy an insurance policy of their choice. Read on to know more.
In the context of the modern lifestyle, where people are vulnerable to various lifestyle-related illnesses, life insurance remains one of the must-have investments in your portfolio. It is vital to safeguard the financial future of your loved ones, even in your absence. And the best thing is, not just Indian residents but Indians residing in foreign countries (NRIs) are realising its importance.
The Foreign Exchange Management Act (FEMA) allows the NRIs and PIOs (People of Indian Origin) to purchase a life insurance policy in India. If you are an NRI and are looking to buy a life insurance plan to protect your family, you can find plenty of policies to suit your specific insurance needs.
Here are five things you must remember while buying the best term insurance for NRI:
Know Your Eligibility
As per FEMA, all NRIs and PIOs can purchase a life insurance policy provided they fulfil certain eligibility requirements. You must hold a valid passport issued by the Government of India. You must be residing in a foreign country for employment or business purposes and must have a regular source of income.
For PIO, you must have held Indian passport in the past, or your grandparents were Indian citizens under the Citizenship Act, 1955.
Choose Your Insurer Carefully
Once you are sure of your eligibility, the next step is to choose the right insurance company. Today, more than 20 insurers in India offer a variety of life insurance plans for the NRIs. It would help if you made your choice based on important factors like the company’s claim settlement ratio, quality of customer service, variety of plans offered, flexibility to customise the plan to your specific needs, etc.
Although the insurance companies do not offer any exclusive life insurance for NRIs, some insurers have restructured the process for issuing the policy to make it easier for you to comply with the documentation and undergo the medical examinations.
Be Aware of the medical examination process
When you buy a life insurance policy in India, you must undergo a medical examination; it is a part of the buying process. There are two ways to complete the process. You can either visit India for the tests, and the insurer will bear the expenses or you can do the necessary tests overseas (in your country of residence) and send the reports to the insurer in India. In the latter case, you must pay for the tests from your pocket.
Determine the mode of premium payment
When you purchase a life insurance policy in India, you should check the premium payment method in advance to avoid any hassles later. Generally, the insurance companies allow NRIs to pay the premium in two ways. You can either pay the premium in foreign currency through your NRE/FCNR bank account or pay the premium in INR through your NRO account.
Know about the rules for death and maturity benefits
If you purchase a life insurance policy in India, the nominee is bound to get the death benefit, irrespective of the place of demise. The amount paid to the beneficiary is in the specified currency (as mentioned in the policy document), i.e., either in Indian Rupees or foreign currency. To get the claim amount, the beneficiary must submit the necessary documents, which may vary from insurer to insurer.
Now that you are aware of the different aspects of buying a life insurance policy in India make sure that you compare the plans and choose the one that suits your needs perfectly.
