Here's why NRIs should buy life insurance in India
When NRIs buy term insurance in India, the aim is to secure the future of their family back home which is financially dependent on them for a living.
In the context of the Indian way of life, term insurance remains one of the most common and prevalent financial schemes in which citizens invest. In fact, the importance of investing in life insurance isn’t limited to those who live in India. The non-resident Indians (NRIs) who have successfully established themselves in a foreign land also recognise the value of life insurance in protecting the financial needs of their family members.
Moreover, contactless documentation including FATCA (Foreign Account Tax Compliance Act) and KYC/video-based verification are major factors encouraging investors to make the best use of their homeland’s currency value. As per guidelines issued by the Reserve Bank of India, premium amounts received from outside India through proper banking channels are considered valid and treated as ‘Freely Convertible Foreign Exchange’.
When NRIs buy term insurance in India, the aim is to secure the future of their family back home which is financially dependent on them for a living. You have the flexibility to invest in an insurance cover worth Rs 1 crore at a premium of Rs 500 per month. Additionaly, the GST levied on life insurance premium (initial as well as renewal) for NRIs could be exempted, if the received premium is in foreign currency. However, the process to claim reimbursement on GST can vary from insurer to insurer.
Does the person has to be present at the time of buying policy?
While the easiest way for NRIs to buy term insurance in India is to do it when they visit the country, the digital revolution has made it possible for you to buy it online through various portals too.
“One doesn’t have to necessarily be physically present in India to buy a term insurance policy, though it may differ from one company to another. Going online is the best way to purchase life insurance for an NRI. As a result, you can compare all available options to find the best plan and purchase it instantly from the comfort of your own home,” said Sajja Praveen Chowdary, head – term life insurance at Policybazaar.com
NRIs can select and fill the insurance application and pay the premium online. Depending on the company policy, your insurer can request a telemedical or physical medical apart from other necessary documents. Notably, insurers also give due importance to the country you currently reside in before approving the application. If everything seems ordeal, the application is accepted and a policy is issued to the NRI customer.
Additional costs
However, Chowdary said, “There may be some additional costs in cases where NRIs are involved. For example, if you purchase the policy from outside of India, you will be required to undergo a medical examination and submit the results to the insurance company in India. But, if you are in India at the time of purchase, the insurer can conduct the necessary medical examinations.”
After you’ve completed the application and paid the premium, the insurer may request a telemedical or physical exam based on your medical history, in addition to the required documentation. The insurer may examine the country you live in while processing your application, and if everything is in order, the application is accepted and a policy is issued to the customer.
Insurance is crucial
Living and earning abroad is still looked upon as an aspirational thought. People save their hard-earned money to send kids to foreign universities. More often than not, the kids settle abroad in the wake of a glorious career while their dependents are left behind in India. If you’re the single breadwinner in the family or even otherwise, it’s very important to have domestic term insurance in such case scenarios.
In case of your unfortunate demise, the family can cling to the insurance amount to deal with the sudden financial crisis. If you have insurance abroad, the family will hardly be able to understand the norms of a foreign land to be able to file for a claim. While buying insurance, also think from the point of view of the nominee rather than yourself.