Can NRIs buy a Life Insurance in India?
Yes, as per Reserve Bank of India (RBI) Non-Resident Indians (NRIs) can buy insurance in India.
What are the Advantages of buying Life Insurance from Indian Insurer?
Apart from the life insurance coverage that it offers, there are two additional advantage of buying an insurance policy from an Indian Insurer –
A- Tax Rebate
1- Under Sec 80C
There is a tax deduction up to Rs. 100,000 available on the premium paid under sec 80C as an investment. Obviously, it will help you only if you have Indian taxable income.
2- Under Sec 10(10D)
Any benefits received on life insurance policy is tax free.
Tax benefits / exemptions are applicable irrespective of the status of the NRIs (NRIs/PIOs or OCIs).
The price of life insurance policies issued by Indian Insurers are cheaper than the similar life insurance policies offered in UK, USA or other countries.
Onshore/Offshore : From where NRIs can buy Life Insurance?
Life Insurance can be bought by a NRI in two ways –
1- If a medical test might be required, NRIs can buy life insurance in India during their visit to India. So that they can complete medical tests and all other formalities related to the underwriting of the insurance policy.
2- If no medical test is required, NRIs can buy the life insurance policy from abroad (the country of their current residence). In this method the policy documents to be verified by an official of the Indian embassy or, an Indian diplomat or, notary or, medical representative or a dean or supervisor in case of a student.
Documents Required by NRIs to apply for Life Insurance
1- Proposal Form: It contains details of proposer’s personal details, sum insured and nominee details etc.
2- NRI Questionnaire: This questionnaire contains details about proposer’s country of current residence, visa status, employment details etc.
3- Age Proof: Copy of age proof e.g. passport.
4- Passport Copy: Copy of Relevant Pages of Passport with copy of valid work permit/ visa
5- Income Proof: Proposer can submit any or both the below documents –
(a) Appointment letter/employment contract/salary slips/ or letter issued by the employer stating policyholder’s designation, tenure and salary details etc.
(b) IT assessment orders/ tax returns, if the same is issued in the country of employment.
6- Bank Account Proof: Copy of Relevant Pages NRE/NRO Account
7- Permanent Address Proof in India
8- Premium Payment: Amount equal to first premium
9- Photograph of Proposer
10- Health Report (If necessary): Health Report as specified by the insurer on health condition of the proposer (not applicable if the proposal is under non-medical scheme)
How the Claim amount will be paid?
Any transaction for life insurance policy will be received and paid in Indian Rupees Only. The premium as well as claim amount will be in Indian denominations. If a claim is payable, the amount is credited to NRE/NRO account of the nominee. If nominee is living in India, payment will be made through cheque or credited to the Indian bank account.
What type of Insurance Policies NRIs can buy?
NRIs can buy any life insurance policy (ULIP, Endowment, Moneyback, Pension Plans etc.) as offered by life insurer to NRIs. But most of the insurer avoid issuing high sum insured term life insurance policies to NRIs, because of high risk.