Life Insurance Guide for NRIs Planning to Buy a Policy

The Foreign Exchange Management Act (FEMA) has made it possible for Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) to getterm insurance in India. Many insurance companies have introduced customised options that cater specifically to the needs of  NRIs. Read on to understand the implications and advantages of different life insurance policies that you can avail in the Indian market and the procedures for the same.

Buying life insurance in India can be a smart move, especially if your family lives here or if you're seeking affordable coverage with payouts in Indian Rupees.

Read on to understand the implications, benefits, and procedures involved in buying a life insurance policy in India as an NRI.

Buying life insurance as an NRI involves a few additional steps compared to residents in India. While the process is fairly straightforward, it helps to be aware of key factors like eligibility, medical requirements, payment options, and claim rules. Understanding these aspects in advance can help you make a well-informed decision that suits your financial goals and family’s needs. Here are some important considerations:

• Eligibility: An NRI (Non-Resident Indian) can be defined as an individual who has lived outside India for a specified period. PIO (Overseas Citizen of India) category has now been merged with the OCI (Overseas Citizen of India) category, according to recent Government of India notifications. If you are an individual from any country except Pakistan or Bangladesh, you may be eligible to apply as an OCI if you meet the following conditions:
  
  
  1. You have possessed an Indian passport at some point in your life.
  2. Under the Citizenship Act, 1965, you or your parents or your grandparents have been citizens of India.
  3. You are married to an Indian citizen.

If you are a Non-Resident Indian, you need a valid Indian passport. If you are a PIO who meets the above requirements, then you qualify to apply for purchasing life insurance.

• Medical Examination: You don't need to be present in India to purchase life insurance. Your location does not limit your ability to apply for a policy.. However, depending on the insurer’s requirements and the type of plan, you may need to visit India in order to give your medical examination. 
  
  Typically, there are two ways to give the medical test:
  1. In India: You can undergo the medical test during a visit to India. In many cases, the insurer may cover the cost of the examination.
  2. broad: You can take the medical test in your country of residence and submit the medical reports to the insurer in India.

In some cases, if the insurance is created specifically for NRIs, the insurance company in India also partners with diagnostic centres or medical networks abroad. In select cases, remote or tele-medical assessments may also be considered, depending on the policy and insurer’s guidelines. 

• Premium Payment: Many times, people residing outside India have families back home who can monitor and ensure that the premiums are being paid via banks in India. The premium can be paid using the following accounts:
  1. NRO (Non-Resident Ordinary) account: for payments made in Indian Rupees (INR)
  2. NRE (Non-Resident External) account: for payments in foreign currency or repatriable INR
  3. FCNR (Foreign Currency Non-Resident) account: for policies purchased in foreign currency

If the life insurance policy is issued in a foreign currency, then the premium will be paid from an NRE or FCNR account. It’s important to check with your insurer for accepted modes of payment and currency preferences before purchasing the policy.

• Costs: The cost of life insurance for NRIs can vary depending on several factors, one of the most important being your country of residence.
  
  If you reside in a country facing political instability or unrest, often referred to as a high-risk country, you may be considered a higher risk by the insurer. As a result, the premium you pay could be slightly higher.
  
  However, if you live in a country with stable political and social conditions, the premium amount is generally lower and more comparable to what residents in India pay.
  
  Insurance companies usually assess risk based on country-specific factors, and it’s a good idea to confirm how your location may impact the premium before making a decision.
• Maturity and Death Benefits: A Life insurance policy purchased by NRIs from insurance companies in India provides coverage regardless of your location at the time of death. The death benefit will be paid out to the nominee either in Rupees or the currency of the nation where the nominee resides, depending on the insurer’s policy terms and applicable regulations. Similar to a regular life insurance policy, the nominee would need to submit the necessary documents, such as the death certificate and ID proofs, as per the policy terms.
  
  It's important to ensure that the nominee is aware of the documentation and claim process in advance to avoid delays.

Should NRIs Purchase Life Insurance in India?

A Life insurance policy in India can be utilised by NRIs as a means of protection for their loved ones in case of unforeseen events. There are many stages in life when your family would need your financial support, and by purchasing a life insurance policy, you can safeguard your dependents in your absence. Another useful feature is that when your family is located in India, they can explore options and discuss opportunities with insurance companies here with much ease.

You would, of course, need to understand the benefits that different policies would have for you, given your life situation. You would also need to compare the different life insurance policies offered by Indian insurance companies before making your choice.

If you're exploring long-term protection options in India, a term plan by Canara HSBC Life Insurance can be your best bet. We offer global coverage and flexible benefits, which may align with your needs as an NRI. It's worth exploring plans that support digital purchase, allow payments from NRE/NRO accounts, and offer flexible claim payouts for your family in India.

Conclusion

You can select the life insurance policy that meets the requirements of you and your family. Term plans by Canara HSBC Life Insurance can make the procedure of purchasing life insurance in India a fairly simple process. Ultimately, based on your financial situation, you can explore how you can best use a life insurance policy to meet the needs of you and your family at different milestones of life.