3 Ways an NRI or PIO can Pay Premiums

Banks have streamlined their working cycle to give insurance protection to Indians residing outside India. Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) are permitted to invest in term plans. 

Key Takeaways

• NRIs and PIOs can pay insurance premiums through foreign currency settlement, NRO, or FCNR accounts.
• Types of insurance available include Life, Medical, Personal, and Comprehensive Single-Cover Plans.
• Choosing the right policy requires assessing family needs, claim settlement ratio, policy cost, and coverage duration.
• Policies may require medical documentation, and claim settlements are often done in INR.
• ULIPs offer the dual benefit of investment and protection for those seeking long-term wealth creation.

Here are a few things to consider while buying a life insurance cover for NRI and PIO:

• An individual residing outside India for less than 182 days during the financial year is eligible to get insurance coverage.

• The insurance holder should be an Indian resident; this will ensure inclusion in the coverage, even when they travel or reside abroad.

• It is said that a person should buy or get the insurance cover in person at whatever point they are in India, as it helps in completing the necessary procedures and underwriting formalities more efficiently.

• If a person is unable to visit India, they can get insurance cover through Mail Order Business (online). In the online process, the person must conform to a public accountant, an Indian ambassador, or an authority of the concerned Indian government office abroad.

• Banks also provide travel insurance for people travelling abroad, like emergency medical treatment and assistance, legal travel assistance, and emergency financial help. A person needs to consult the bank before choosing any travel insurance plan.

Before moving ahead with a policy, it’s also important to understand how premium payments work for NRIs and PIOs.

How Does an NRI or PIO Pay the Premium for a Life Insurance Cover?

There are three prominent ways through which an NRI or PIO can pay the premium amount.

1. Amount of Settlement in Foreign Currency
   The bank offers services to convert the local currency of the country where the individual resides, works, or studies. To transfer the money, the person is required to contact the bank’s customer care executive through email or by simply visiting the bank if the bank has a branch in the foreign country. Ideally, an amount is transferred between 3-4 business days to the account of the receiver.
   
   
2. NRO Account
   A Non-Resident Ordinary (NRO) Account allows NRIs and PIOs to manage income earned in India, such as rent, dividends, pensions, or other earnings, and make payments to family members or employees.
   
   It allows individuals to transfer or manage their insurance premium payments to any bank account nominated by them. They can remit the principal amount within the prescribed limits, up to USD 1 million per financial year. The interest earned on an NRO account is subject to a 30% tax, deducted at source.
   
   If an individual has income generated in India and needs an account to manage those earnings domestically, an NRO account is a suitable option.
   
   
3. FCNR Bank Account
   FCNR is the Foreign Currency Non-Resident Account. If a person is living abroad but wants to maintain a Fixed Deposit Account in India, they can opt for an FCNR Account, which allows them to deposit foreign currency acquired abroad. The amount is converted into:

• US Dollars
• Pounds
• Euro
• Japanese Yen
• Australian Dollars
• Canadian Dollars

There are a few important things that you should know about the FCNR account such as:

• FCNR Accounts are Deposit Accounts and not Savings Accounts.
• A person can open an FCNR Account by moving cash from their current Non-Resident External (NRE) Account.
• The premium that a person acquires on FCNR accounts is tax-exempt, and it is not available in India.
• A person can benefit from an overdraft facility over their FCNR Term Deposit Account.

Types of Insurance for NRI and PIO

There are several insurance options available to NRIs and PIOs, each designed to offer financial protection tailored to their unique needs while living abroad. Choosing the right type depends on personal goals, lifestyle, and future plans.

Life Insurance

Life insurance is essential for anyone with dependents or financial responsibilities that would fall on others in their absence. If you're an NRI or PIO planning to purchase a term insurance policy while living abroad, without visiting India, it's important to ask the bank a few key questions:

• Can the amount be paid in the home currency?
• The claimed money would be paid in what format, NRE/NRO or any other format?
• What is the inquiry that the bank will do from the NRI or PIO?
• Is the insurance cover renewed?
• What interest is charged on the insurance cover?
• At what point can a person withdraw the insurance amount?

Medical Insurance

Medical insurance is crucial for NRIs and PIOs to safeguard against unexpected health expenses, whether in India or abroad. These policies cover hospitalisation costs, medical treatments, surgeries, and other health-related emergencies.

Some insurance providers also offer India-specific health plans that activate when the policyholder is visiting or staying in India temporarily. These plans can be useful for those who travel frequently or have ageing parents they support back home.

When selecting a medical insurance policy, it's important to check:

• Whether the coverage is valid internationally or only in India
• The cashless network of hospitals
• Inclusions and exclusions
• Pre-existing disease coverage and waiting periods
• It’s advisable to choose a plan that not only offers wide coverage but also provides ease of claim settlement while you're living abroad.

Personal Insurance

Personal insurance acts as a protection netthat a person gets if any mishap or inadvertent event happens. A person should check or ask the bank for the personal insurance policy as not every bank offers it to NRI and PIO.

In personal insurance cover, reimbursement for medical expenses and compensation for accidental injuries are paid by the banks in India, and the amount is payable only in Indian rupees.

Other Insurance Cover

Banks, through partnerships with insurance providers, provide NRIs and PIOs with a single comprehensive insurance package, with a one-time lump sum payout to the account holder.

To avail of this single insurance cover package, the individual must submit specific medical documents as required by the bank.

Five Things to Remember while Choosing Life Insurance Cover from Canara HSBC Life Insurance

• NRIs and PIOs can open a bank account.
• A person can open a joint bank account with a minimum of two and a maximum of four individuals.
• A person can open only a KDR account.
• The foreign currency that is to be invested in NRE is converted into rupee balance in the depositor’s NRE account.
• For customer convenience, the bank converts the amount to the currency of the respective country.

There are specific terms that a person needs to follow to avail the benefit of insurance cover from the bank:

• A person is required to provide the precise mandate to receive the maturity amount in Indian rupees, to be credited to their NRESB/NRE/NROSB account.
• If the person wants the insurance coverage fund, they will get it only after one year.
• If a person wants to withdraw their insurance coverage from the bank, they may incur certain bank charges.

How to Choose the Right Life Insurance Cover?

Choosing the right life insurance plan involves understanding your priorities, financial responsibilities, and long-term goals. The ideal policy should offer both peace of mind and practical financial protection.

1. Adequacy of Coverage 
   Everyone needs security to shield their family from facing any financial difficulties while working abroad. To choose the ideal insurance cover for the family, a person needs to consider certain factors, such as the number of dependents, whether there will be any marriages in the coming years, the age of family members, and the person's current income. Additionally, a person should also consider their long-term financial resources and liabilities.
   
   
2. Cost of the Policy
   People should check the cost they have to pay to the bank to obtain the appropriate insurance coverage. They should review the asset board expenses, mortality charges, and renewable insurance charges, if applicable, etc. Before settling on any decision, a person should ensure that they have perused the fine print of the costs involved cautiously to get the insurance cover.
   
   
3. Claim Settlement Ratio
   The primary reason for obtaining insurance coverage is that family members or close ones do not have to suffer the discomfort while a person is not in the country. A person should be aware of the claim settlement procedure before choosing any insurance coverage plan. The claim settlement is calculated in rate terms. The higher the proportion of claim settlements, the more benefits the person will receive.
   
   
4. Duration and Scope of Protection
   Beyond the amount of coverage, it’s essential to evaluate the policy's duration and its comprehensive scope. Look for a term plan that offers long-term security without restrictive expiry dates. Ensure the policy includes key benefits such as critical illness coverage, accidental death benefit, and terminal illness protection if those align with your needs.
   
   A person should choose term insurance that covers every need, including medical emergencies. The cover should provide security which gives inclusion to an unrestricted timeframe. Term insurance cover should have an adequate amount that a person needs in an emergency or any other unavoidable circumstances.
   
   
5. Flexibility and Investment Options
   In addition to protection, some policies offer the flexibility to align with your financial growth plans. For instance, Unit-Linked Insurance Plans (ULIPs) combine life cover with investment opportunities. These allow you to grow your wealth over time while keeping your family financially protected. Choose such flexible options if you’re looking to build a legacy alongside insurance security. ULIPs are a great way to manage your investment portfolio. You will get a life cover with an investment avenue where you can boost your wealth creation and legacy-building strategy.

Wrapping Up

Insurance cover for NRI and PIO is a great option for them to keep themselves and their family secure. It acts as a reliable emergency asset, offering peace of mind and support when it's needed most.

However, choosing the right policy involves careful consideration of the bank's terms and conditions, premium payment schedules, and selected features. Premiums can be paid through NRO or NRE accounts, depending on the individual’s financial setup.

To apply for coverage, applicants typically need to submit documents such as a duly filled proposal form, age proof, medical reports, and the first premium payment. For policy renewals, medical evaluations may be required to meet underwriting criteria.

It is equally important to ensure that payments are made on time and that there are no lapses or delays that could affect the validity of the policy. With proper planning and timely action, life insurance can be a strong pillar of financial stability for NRIs and PIOs.

Take the first step today! Secure your future and your family’s peace of mind with a life insurance plan from Canara HSBC Life Insurance that travels with you, no matter where life takes you.