4 min read
Updated on Jul 13, 2022
Buying a life insurance policy is one of the most traditional ways of investing money. There are NRIs who also want to invest in life insurance but are not sure how can they do it. Well, life insurance for NRIs in India is very much possible and easily available. It is a smart move for them especially due to the tax deductions that they are entitled to if they are filing income tax in India. However, certain factors need to be considered by the NRIs before they purchase a life insurance policy in India. Let us check them out today.
There are life insurance policies for NRIs but they need to fulfill some conditions. The conditions are as follows:
You need to ensure that to buy a life insurance policy in India; you need to have a valid Indian passport that has been issued by the Government of India or that you fall in any of the above categories.
Once you find out that you are eligible for buying a life insurance policy in India, the next step for you is to choose an insurance company in the country. This can be a little confusing since you will come across as many as 23 insurance providers and many of them offer a wide range of products. To get started with the process, you should begin by checking the claim settlement ratio of the company. This will give you an idea about the chances of your claims being settled when you make one. While doing so, you also must check the track record of the company. You can also take help of the online reviews to get an idea of this. And trust on this, that not all the reviews that you see online are paid. Some of the insurance companies have restructured the process of issuance of insurance policies to the NRIs. You can get help from them whether it is for documentation or medical tests.
You must make it a point to know about the mode of payment so that you do not have to face any kind of trouble later. There are two types of policies available to the NRIs. The first one is the rupee-denominated policy in which the policyholder has to pay premiums in Indian rupees by using his/her NRO accounts. The other one is the foreign currency-denominated policy in which the premiums are paid in foreign currency through the NRE/FCNR account of the policyholder. Mentioned herein below is the table that shows the comparison between NRO, NRE, and FCNR accounts.
|Criteria||Non-Residential External Account (NRE)||Non-Resident Ordinary Account (NRO)||Foreign Currency Non-Resident Account (FCNR)|
|Account type||Savings, Current, Fixed Deposits Account||Savings, Current, Fixed Deposits Account||Fixed Deposit|
|Suitable for||NRIs whose income source is only from abroad||NRI who earns from both India and abroad||NRIs who want to invest in India but are not in a mind to take currency risk|
|Currency of money deposit||Rupees||Rupees||Canadian Dollar, US Dollar, Australian Dollar, Euro, Pound Sterling|
|Money can be deposited from||Abroad||Abroad and India||Abroad|
When you buy a life insurance policy, you need to undergo a medical test. However, to get it done, you can choose either of the two ways. As per the first step, you can come to India and the medical expenses will be borne by the insurance company. The other option is to get it done abroad and once you receive the report, you can send it to your insurer. In the case of the second option, the cost of the medical test has to be borne by the policy buyer, until and unless they are purchasing a life insurance policy specifically for non-residents.
Before you buy a life insurance policy in India for NRI, you need to consider the tax laws in India as well as the country that you are living in. You should check for tax implications at all three stages of the policy cycle, which include investment, accumulation, and maturity. While under the current tax in India, all the three stages are exempted, you need to ensure that it is the same in your country too. You can also consider discussing the same with a specialist who can clear all your tax-related queries before you decide to buy a particular life insurance policy in India. Buying a life insurance policy from India can be affordable as well as easily understandable. You must check your options thoroughly before concluding and investing in a policy.
There are quite many life insurance companies and the policies that are offered by them. To find the best life insurance policy in India for NRI, you can browse through the various websites on the internet. You can certainly find all the required information online and accordingly take your decision about the policy that you would like to buy.
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