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Indians residing in and outside the home country see the need to invest in life insurance. Fortunately, the Foreign Exchange Management Act has made it possible for Non-Resident Indians (NRIs) and the Person of Indian Origin (PIO) to take life insurance in India.
If you are an NRI and looking for affordable savings plans or regular income plans, you may have several questions sitting in another country and thinking about enrolling in these plans. We, at Tata AIA Life Insurance Company, have tried our best to answer them below.
Yes, NRIs and PIOs (as defined by FEMA) who reside abroad are allowed to purchase life insurance in India. All persons of Indian origin, regardless of their citizenship status in India, can take such a policy in their home country to protect themselves and their families.
It is not compulsory to be present in India while buying a life insurance policy for NRI. It is best to buy the plan after comparing all the available options. Although not required, being present in India while buying the plan can be highly beneficial. You would have to do all the medical examinations and send the reports to the company in India if you purchase the policy from abroad. However, the cost of a medical checkup will be borne by you.
On the contrary, buying the plan while staying in India saves you from incurring additional costs out of your pocket. Here, the insurer conducts and bears the costs of your medical check-ups.
The premium for life insurance for NRI in India can be paid through any of these modes:
Settlement payment in foreign currency.
Non-resident ordinary bank account.
FCNR/NRE bank account.
It is crucial to check the currency in which the policy is issued as the insurance companies can issue them in the currency of the resident country of the NRI or in Indian rupees. If the policy issued to the NRIs is in a foreign currency, they will have to pay premiums in that currency from an FCNR/NRE account held in India. But if the policy is issued in Indian currency, premiums can be paid through NRO accounts. However, there are not many insurance companies that offer policies that can be paid using foreign currency.
Normally, premiums are the same for both residents and non-residents for the same insurance policy. But if the NRI is living in a country where life risks are higher, premiums may be higher. A country prone to civil or military issues has an unstable government and faces constant violent attacks can be labeled a high-risk Country. In the same manner, low-risk countries are characterized by peace, stability in governance, good law and order conditions. An NRI living in a high-risk country will be charged a higher premium.
The life insurance policy for NRI from insurance companies in India will cover death irrespective of the location anywhere in the world. The return of premium by the company for the particular insurance plan will either be in rupees or foreign currency, as mentioned in the documents. To make the death claim, the nominee will have to submit all the necessary documents listed in the policy.
The death claim amount or the maturity benefits can only be transferred to the resident country only if the amount is equal to the premium that was paid through foreign currency. Therefore, the premium amount that was paid in Indian rupees cannot be transferred.
The proceeds will not be transferable if the policyholder pays the entire premium amount in Indian currency using an NRO account. However, if the policy is taken before becoming NRI, the proceeds that remain transferable are equal to the premium paid in foreign currency out of the total premium paid by the individual.
Having discussed the rules and regulations of buying life insurance in India, NRIs must evaluate if they should buy one. Certain things must be considered here:
Need to secure the family: Investing in life insurance ensures a good source of income and acts as a safety cover for the family members. It should be understood that there are multiple expenditure milestones in every member’s life. In the event of the sudden demise of the primary income earner, a regular income plan can cover such loss or any other uncertainties through the return of premium. So, it is best to be prepared for such risks by going for suitable life insurance.
Cost and Tax* Regulations: An NRI needs to consider if the policy will be cheaper in the country of residence. A decision must be taken after taking into account all the concerned factors and assessing the cost.
The Tata AIA Life Insurance Fortune Guarantee Plus (UIN: 110N158V02) is a flexible long-term savings insurance policy that offers guaranteed returns#. It can be treated as an insurance-cum-savings plan that offers the dual benefits of life cover along with assured returns on investments. The policy also ensures the return of the premium amount paid after maturity.
In India, the benefits and earnings from a life insurance policy are tax-free* for both death and maturity. The case might not be the same in the resident country. The NRI must carefully look at tax provisions in the country of residence and determine whether he/she will need to pay tax* on earning the amount.
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*Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
#Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry.
Insurance cover is available under the product.
The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not a guaranteed issuance plan and it will be subject to Company’s underwriting and acceptance.
For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.
This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life Insurance shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.