Life Insurance In India - Can NRIs Buy It?

Nobody likes to stay away from their family. Daily chit-chat with your parents or small fights with your siblings hold your brain hostage and make it impossible for you to even think about staying away from them. But reality kicks in and you leave their side to move to another country (for studies/job). Eventually, the distance grows along with your love for them. Love=safety and that’s when you decide to figure out a way to safeguard your family’s financial future (in your absence). And the best way to do that is via life insurance.

As an NRI, a bunch of questions about life insurance policy must be bouncing in your head. Your brain will appreciate quick answers & that’s what we are going to do here. It's better to go the old fashion way and answer all the important questions one by one.

Question No.1- Can NRIs purchase life insurance policy?

Of course, they can. Fortunately, FEMA allows NRIs/PIOs to buy life insurance to safeguard their own/family interests irrespective of the residence of the insured.

Question No.2- Is it mandatory to be in India to purchase life insurance?

No. An NRI can buy life insurance Online from outside India via the digital route. It will allow you to compare & check all available plans and go with the best among them. However, there is one drawback that an NRI has to remember. In order to buy life insurance, it is mandatory to have a medical checkup & its cost is borne by the insurance company.

This process is applicable to a person who is physically present in India while buying the insurance. Now, if you want to purchase a policy from outside India, you need to have a medical checkup and send its results to the insurance provider but its cost will be incurred by you.

Question No.3- Will my application be affected by my country of residence?

Yes. Every life insurance company keeps a close eye on the country that you are currently residing in. To keep things simple, insurance companies have classified countries into 2 categories- High-risk & low-risk. A high-risk country will have an unstable government & is more prone to military/civil/violent clashes. If you reside in such a country, there are high chances of your application being rejected or you may be asked to pay a higher premium.

A low-risk country will have a stable government without many issues of civil/military unrest. If you reside in such a country, there is no need to worry about your application.

Question No.4- What is the payment method?

You can pay the premium of a life insurance policy via NRO or NRE/FCNR bank account. Both have different demands- if you have bought the insurance in a foreign currency, you have to pay the premium via FCNR/NRE account (in denominated foreign currency). If you have bought the insurance in Indian currency, you have to settle the premium via the NRO account.

Question No.5- How will my provider settle the pay-out?

Just like premiums, you/your family will get the benefits of the insurance via the currency (Indian/foreign) listed in the policy document. To file a claim, submit all the necessary documents demanded by the policy and you are good to go. The list of mandatory documents will vary from insurer to insurer.

For example, in order to claim the death benefit, the insurance company will demand the death certificate of the NRI, the nominee's identity proof, etc. However, there is one thing to focus on. If an NRI dies outside India, the insurance provider will need his/her death certificate attested by the high commission/Indian embassy of that country. The same is not required if the NRI dies in India.