In India, life insurance is believed to be the most preferred financial instrument, especially in comparison to some prominent milestones of life such as constructing a house, children’s education and their weddings. Even a recent survey conducted by Exide Life Insurance revealed that life insurance remains the most preferred financial instrument for creating a safety net while staying insured. The best part is that it’s not just Indians who reside in India who feel the need and see the importance of investing in life insurance. Indians well settled in a foreign land also understand the significance of life insurance to protect the needs and requirements of their family members. No wonder, life insurance is a one-stop solution to put your mind at ease.
For Non-Resident Indians (NRIs), there are some significant advantages to purchasing Indian life insurance policies as the individuals can often readily benefit from the death benefit (regular term plans). Life insurance even provides the clients with a tax-free death benefit, assist in estate building and is an excellent financial instrument used for legacy planning (whole life term insurance), allowing insured to leave a legacy for the heirs.
Luckily, there are numerous prominent life insurers in India who offer life insurance to NRIs as well. NRIs can now buy term insurance plans in India at premiums that are among the cheapest in the world. While it is an interesting initiative, there are numerous things that must be kept in mind by NRIs while buying into any such plans.
Under the Foreign Exchange Management Act (FEMA), NRIs, as well as People of Indian Origin (PIOs), are allowed to buy a life insurance plan in India. The individuals – whether residing in India or not – are free to buy any plan that best meets their requirements of protecting themselves and their family members. To pay the premium, one may choose to pay through an NRO bank account, NRE/FCNR bank account or in foreign currency. However, if you choose to pay using foreign currency, it is important to check well in advance in which currency the policy was issued.
In order to buy a term insurance policy from India, the NRI needs to go through a medical examination in the country of residence and its reports need to be sent to the insurer in India. After examining the reports, the insurance company takes a final call on issuing the policy, and the premium amount. Some insurers even allow policy seekers to go through tele medicals in order to issue a term policy. The NRI customer is asked a defined set of questions about medical conditions over a call, the basis on which the policy is issued.
If an NRI has purchased a life insurance policy from an insurer in India, the policy is bound to cover death, irrespective of the country where the event occurs. The death benefit paid to the beneficiaries of the policyholder is in the currency specified in the policy document i.e. either in Indian Rupee or any other foreign currency. In order to make a death claim, the nominee needs to submit all the documents as mentioned in the policy terms. One must learn that the list of documents required may vary from one insurer to another.
Some of the most common documents required for making a claim include a copy of the policy, death certificate of the insured, identity proof of the nominee, etc. Most importantly, if the death of the insured occurs in a foreign nation, the nominee needs to submit a death certificate duly attested by the Indian Embassy in the respective country.
Listed below is a comparison of the prices of term insurance offered by five prominent insurers for a 35-year-old male non-smoker NRI, residing in UAE. The total sum assured is Rs 1 crore and the cover is up to 75 years.
|Company||Plan Name||Medical Examination Type||Annual Premium (Rs.)|
|ICICI Prudential Life Insurance||iProtect Smart||Tele Medicals||17,610|
|HDFC Life Insurance||3D Plus Life Option||Tele Medicals||17,575|
|Max Life Insurance||Online Term Plan Plus||Mandatory Medicals||14,514|
|TATA AIA Life Insurance||Sampoorna Raksha||Mandatory Medicals||12,508|
|PNB MetLife||Mera Term Plan||Mandatory Medicals||13,683|
The author is Chief Business Officer- Life Insurance, Policybazaar.com. The article has been published in collaboration with Policybazaar.com. Opinions expressed are those of the author.