Should NRIs get an insurance in India?

Are you wondering whether to get insurance in India or not? After all, India is your homeland, and you may have family, property, or business interests there. You may also have plans to return to India in the future or visit frequently. 

But is getting insurance in India a wise decision or a waste of money? Let’s find out…

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Should NRIs get Insurance in India?

The answer to this question depends on your personal and financial situation, goals, and preferences. Here are some factors that may help you decide if you need insurance or not:

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Type of insurance

The insurance you need influences your decision to get insurance in India or not. For example, getting life insurance in India may be advantageous if you have a dependent family back in India. 

Having health insurance may be useful during your frequent visits to India.

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Plans on moving back to India

If you have plans to move back to India in the later years, getting insurance in India may be a good idea - health and/or life. Having insurance can help you secure your future when you move back. 

Getting insurance earlier on in life may lower your premium amounts. Insurance premiums tend to increase with age and health conditions. 

Usually, insurance companies have a waiting period of 1 to 2 years before you can avail the policy benefits. Thus, getting insurance before your move back to India will help you overcome the waiting period. 

Also, even if you don’t have any plans to move back to India, getting insurance may still make sense. If you visit India frequently, having health insurance may be useful during your visits. 

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Dependents in India

Getting insurance in India may be beneficial if you have dependents or beneficiaries in India, such as your parents, spouse, children, or siblings. 

In case of any unfortunate event (death, disability, or illness), the insurance cover will come in handy for your dependents.

However, getting insurance in India may not be essential if you have no family or beneficiaries in India. The insurance in your country of residence may provide sufficient insurance coverage for your family or beneficiaries.

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Pros of getting Insurance in India

Some of the pros of getting insurance in India as an NRI are:

Affordable premiums

Health insurance and life insurance premiums in India are generally lower than in many other countries, especially for younger and healthier NRIs. This is because of the lower cost of living, higher competition among insurers, and lower mortality rates in India. 

For example, a health insurance policy of Rs. 10 lakh (~ $12,000) for a 30-year-old NRI male would cost around Rs. 5,000 (about $68) per year in India, whereas it would cost around $1,000 per year in the US. 

Similarly, a term life insurance policy of Rs. 1 crore (~ $120,000) for a 30-year-old NRI male would cost around Rs. 10,000 (~ $120) per year in India, whereas it would cost around $500 per year in the US.

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Tax benefits

Getting insurance in India may also help you save tax, as you can claim deductions on your premiums under Section 80C and Section 80D of the Income Tax Act, 1961. Under Section 80C, you can claim a deduction of up to Rs. 1.5 lakh per year on your premiums for life insurance and certain pension plans. 

Under Section 80D, you can claim a deduction of up to Rs. 25,000 per year on your premiums for health insurance for yourself and your family, and an additional Rs. 25,000 per year for your parents. 

The maturity or death benefits received from a life insurance policy are exempt from tax, subject to certain conditions, under Section 10(10D) of the Income Tax Act, 1961.

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Wide range of products

India has a well-developed and regulated insurance sector. Over 60 insurers offer various types of health insurance and life insurance products, such as individual plans, family floater plans, senior citizen plans, critical illness plans, term insurance, endowment plans, unit-linked plans, whole life plans, and annuities. 

You can choose the right scheme to suit your financial goals and coverage needs. Some insurers also offer customised plans for NRIs, such as foreign currency denominated policies or policies that cover multiple countries.

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Easy online purchase and renewal

You can buy and renew your health insurance and life insurance policies online without visiting India or submitting physical documents. 

Most insurers have user-friendly websites and mobile apps that allow you to compare plans, check eligibility, fill out application forms, upload documents, make payments, and track your policy status online. 

With online chat, email, and phone support for NRIs, the entire process of purchasing insurance has become quite easy and hassle-free.

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Top Life Insurance Plans in India for NRIs

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Top Health Insurance Plans in India for NRIs

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Tips for Choosing the Best Insurance Policy

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Assess your needs and goals

First, identify your insurance needs and goals, such as protecting your family, retirement, or covering your medical expenses. Next, consider your risk profile, income, expenses, liabilities, and assets. Pick a suitable insurance scheme with the right coverage based on these factors.

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Compare plans and features

Who doesn't like having options? And when you have multiple, always compare and pick the best one. Compare insurance plans and features offered by different insurers, such as premiums, benefits, coverage, exclusions, riders, surrender charges, and bonuses. 

You must also check the insurers' financial strength, claim settlement ratio, and customer service.

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Read the policy document carefully

Always read the fine print to avoid any last-minute surprises. Read and understand the terms and conditions of your policy - the grace period, renewal options, nomination, assignment, and cancellation policy.

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Review and update the policy regularly

It’s a good habit to review and update your insurance policy regularly, at least once a year, or whenever there is a change in your personal or financial situation (marriage, divorce, childbirth, income, or residence). 

Also, never miss out on your premium payments to avoid lapsing or surrendering your policy, as it may result in loss of benefits or penalties.

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Conclusion

Getting health and life insurance in India can be a smart move for NRIs, as it can offer affordable premiums, tax benefits, a wide range of products, and easy online purchase and renewal. 

Health insurance covers medical expenses during visits to India, while term/life insurance offers financial security to loved ones in case of the policyholder's demise. 

Thus, you may consider investing in both health and life insurance in India to ensure comprehensive financial protection and peace of mind. It is advisable to consult a financial advisor or an expert before buying insurance in India to make an informed and prudent decision.

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Should NRIs get Insurance in India?: Frequently Asked Questions (FAQs)

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When is the right time to buy insurance in India for NRIs?

The right time is Now. Waiting until later might not be the best move. Many rely on employer insurance, but that disappears with the job. Get your plan before 45 when it's easier and cheaper. Don't forget your parents too! The older we get, the trickier (and pricier) insurance becomes.

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Will the country of residence affect the NRI’s premium amount?

Typically, insurance premiums are the same for residents and non-residents. However, premiums may be higher for non-residents living in high-risk countries due to increased life risks.

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How can NRIs pay the premium of insurance policies?

NRIs can pay insurance premiums in India through any of the following modes:

• Settlement payment in foreign currency.
• Non-resident ordinary (NRO) bank account.
• Foreign Currency Non-Resident (FCNR) or Non-Resident External (NRE) bank account.

It's essential to verify the currency of the policy, as insurance companies may issue policies either in your residence currency or in Indian rupees. If the policy is issued in a foreign currency, NRIs must pay premiums in that currency from an FCNR/NRE account held in India. 

Conversely, if the policy is issued in Indian currency, premiums can be paid through NRO accounts. However, only a few insurance companies offer policies that accept payments in foreign currency.

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Should NRIs be physically present in India while purchasing an insurance policy?

It is not mandatory for you to be physically present in India to buy an insurance policy.

If you opt to buy the policy from abroad, you'll need to undergo medical examinations and send the reports to the company in India. However, the expenses for these medical check-ups will be your responsibility.

On the other hand, purchasing the policy while residing in India saves you from bearing additional expenses. In this scenario, the insurer arranges and covers the costs of your medical examinations.

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What are the documents required for buying insurance for NRIs from India?

The following are the documents that you need for purchasing insurance in India:

• Passport copy - front and back
• Last entry-exit stamp
• Visa copy
• Passport size photograph
• Last 6 months bank statement
• Last 3 months salary slip
• Foreign address proof (country of residence)
• Employee ID proof

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How do NRIs get a GST waiver or refund on insurance premiums?

You can get a GST waiver or refund on insurance premiums by submitting proof of your NRE bank account details while purchasing the insurance. If you failed to opt for a waiver, you can request a GST refund later by submitting the necessary documents.

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Can NRIs make insurance premium payments in foreign currency?

However, the amount will be converted to INR at the prevailing exchange rates.

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Can NRIs nominate individuals outside India for their insurance plans?

Yes, you can have nominees who reside outside India.

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Can NRIs buy health insurance for their parents living in India?

Yes, you can buy health insurance for your parents living in India.

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Is Indian life insurance valid if you move abroad?

Yes, the insurance you get before becoming an NRI will be valid even after you move abroad. However, it is subject to certain terms and conditions of coverage. The nominee is entitled to the benefits in case of the policyholder’s death.