Tips for Choosing the Right Insurance Policy for NRI

The trend of moving abroad for work and education is increasing in India. From 6.9 million in 1990, the number of person moving aborad has reached to 16 million in 2015 which makes India the largest diaspora of the world. The reason for moving outside India is to avail better lifestyle, standard of living and increased income. Opportunity available abroad are attracting people in India, which is making them shift to foreign countries for education and job.

Most of the people think that, being an NRI, they can't buy life insurance policy in India and will have to go with the policies available in the country, where they are living. But that's not true. An NRI can also buy life insurance policy in India, either by visiting India or from their residing country also.

So through this article we will look at some of the tips for choosing the right life insurance policy for NRI.

• Check Eligibility

You need to check that whether you are eligible for buying a life insurance policy or not. Both NRI and PIO are eligible to get life insurance in India. Being an NRI, you need to have a valid passport issued by the Indian government to buy a life insurance policy. While in the case of PIO, if you had an Indian passport at any time in the past or if your parents, grandparents were a citizen of India or if your spouse is Indian Citizen, then you can buy a life insurance policy from India.

• Know your mode of premium payment

Always identify your mode of premium payment, so that you don't have to face any hassle while paying the premium. You can pay the premium through foreing denominated policy in which NRE or FCNR account is used to make the payment in foreign currency (In NRE account, the foreign currency is converted into rupee) or through rupee policy in which NRO account is used to make the payment in rupee.

Payment through NRE account is advisable if your income source is aborad, while if you have an income source from both India and abroad then the NRO account is preferable.

If you doubt about the currency risk but want to deposit in India, then always go for FCNR account. In NRE and FCNR account, money can be deposited from abroad while in NRO account, money can be deposited from both abroad and India.

• Understand FEMA regulations

You should always check the Foreign Exchange Regulation Act (FEMA) regarding life insurance policy for NRI. Some of the guidelines issues by FEMA regarding life insurance policy for NRI are:

• An NRI who gets benefit for claim, maturity or surrender which are settled in foreign currency may open and credit the proceeds therefore to RFC (domestic) account
• If a policy has been issued to an NRI through the overseas office of the insurer then upon return to India, he can transfer it to Indian register, together with the actuarial reserves held in the policy
• If the policy is bought from India by an NRI then the claim payout can be repatriated in foreign currency, out of India to the extent of the premium paid.

Similar to the above mentioned points, there are other guidelines of the FEMA regarding insurance policy bought by an NRI. It is very much necessary to go through these guidelines and if any query arises, try to get it solved to have a better understanding of your policy and its term.

• Know your Tax deduction

The tax benefit for NRI is similar to what a resident of India receives. So, Under section 80C, the premium paid towards insurance policy is tax deductible and under section 10D, the amount received from insurance policy is also tax deductible. But you need to check tax laws regarding insurance policy for the country in which you are residing also. Check the tax law regarding, payment of premium and benefits received from the premium. Consult an expert in that country for a better understanding of tax exemption on your policy.

• Understand medical examination procedure

For buying a life insurance policy, you will have to go through a medical examination. You can either go to India and get the medical test done through your insurer (in this case the cost of medical test is paid by the insurer) or if you don't wish to go to India, then you can get medical test done in your country also and send the reports to the insurer. In this case, the cost of medical test has to be paid by you if your insurer has no link with overseas medical facilities.

There are many options of insurance policy available for NRI. The premium rate, tax benefit and other facilities of insurance policy is almost similar to what a resident of India is offered. You just need to analyze the available policy, look at the terms and condition mentioned for NRI and choose the best life insurance policy for you

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