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Insurance for NRIs

As an NRI, insurance can sometimes seem to be an unclear issue. But in reality, it’s quite simple. Most individuals require 4 types of insurance.

1- Life Insurance

You require life insurance if and only if there are people who are dependent on your income stream, or on whom any liabilities you have will devolve in your absence.

So for example, if you have a spouse and children who are financially dependent on you, and in your absence they might not be able to meet their living expenses, then you should get life insurance.

A standard term plan is the best option for you. This is pure life cover and no part of your premium is invested. Premiums of term plans are the lowest in the industry, with the corresponding payout in case of death being the highest, compared to the premium. For example, a 40 year old male would most likely pay between Rs. 16,000 and Rs. 25,000 per annum, for Rs. 50 lakhs of life cover.

As an NRI:

Consider the case of an NRI who is studying / working abroad. You can opt for a standard term plan to financially protect your dependents. This can be taken from any of the current insurance companies available in India. However, the definition of an NRI is specified by the insurance companies. For the purposes of this article, a key insurance provider was assessed, and the rules are broadly as follows:

a. An NRI is an Indian citizen who is temporarily residing in the country of his/her current residence, and holds a valid Indian passport.

b. Most insurance companies require that you should not be a green card holder. If you are a citizen of a foreign nation, or are planning to acquire citizenship, you would not be entitled to take life insurance from most Indian insurance companies.

c. If you are already living abroad and wish to take life insurance from there itself, you can opt for the local branches of your chosen insurance company through mail order. The company will issue a policy to you and complete the formalities in your country of current residence itself. However do check this with your chosen insurance company. Most companies will offer you term insurance during your visit to India.

d. Note that if you choose to take the insurance while living abroad, without visiting India, then your insurance provider might limit the maximum sum assured you can opt for.

e. Premiums are typically required to be paid in INR, however this need not be the case with every insurer.

You must also ask your insurance provider details as follows:

a. Can the policy be issued in foreign currency (if you wish for it to be in the currency of your current country of residence)?

b. How will claims be paid (in which currency, and into which account i.e. NRE / NRO)? Do note that different insurance providers have different allowances in terms of the above mentioned points, it is necessary to speak to the insurance provider and ask the relevant questions.

However, you can certainly opt for life insurance, and you should do so if you have not already.

2- Health Insurance

Health insurance is a little tricky. As an NRI, you can opt for health insurance from India, however any claims will only be payable if the hospitalization expenses arise in India i.e. if you are treated in India. This can be pointless for the NRI who is working / studying abroad and hence spends the most part of the year in a foreign country, only visiting India for the holidays. In such a situation, it would not be prudent to take health insurance from India, if it is unlikely that you would be treated in India for any illness.

If you have dependents residing in India, you should opt for health insurance for them. You can also opt for your own health insurance in the country of your residence.

3- Personal Accident Insurance

A Personal Accident policy is an insurance policy that pays out in case of an accident / accidental death. Not all companies offer Personal Accident policies to NRIs, however a few do and these include National Insurance, HDFC Standard Life and United India Insurance.
Typically in cases of Personal Accident policies, medical expenses reimbursement and accident compensation is applicable for the treatment in India and is payable only in Indian rupees. However, accidents occurring anywhere in the world would be covered. This is referred to as worldwide coverage.

4- Critical Illness Insurance

A critical illness insurance policy will provide a lump sum payout (Sum Assured) to the policy holder, if the policy holder has been diagnosed with a critical illness such as cancer, stroke, heart failure and so on. Each insurance company has a different list of critical illnesses that they cover under the policy, with key critical illnesses such as the ones stated above being common.
As an NRI, you can avail of this policy from any general insurance company, but it is important to go through the policy documents to see which illnesses are covered and select the right policy for you.
Upon the diagnosis of a critical illness, you need to submit a claim to the insurance company with the necessary supporting documentation, and the claim will then be processed.
In summary, do assess your insurance requirements and read policy documents very carefully, compare between insurance providers, before opting for any policy – be it for life, health, personal accident or critical illness.

Also remember, planning your insurance is best done as part of a holistic financial planning process which takes into account everything from the ages of your dependents, and your cash flows, to your family’s and your life goals.

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