Life Insurance: Things Non-Resident Indians Should Note

NRI life insurance can be described as a type of life insurance policy that’s designed to meet the insurance needs of Non-Resident Indians (NRIs) and their dependents. NRIs can get these policies from any recognized Indian life insurance company, even if they are residing in another nation temporarily. It must be noted that NRI life insurance plans are subject to the Foreign Exchange Management Act and other regulations put in place by the Insurance Regulatory and Development Authority of India.

Types of Life Insurance for NRIs in India

Non-resident Indians who are looking to buy a life insurance plan for themselves can pick one among these types – 

Term Life Insurance

NRI term life insurance provides financial protection to the insured’s nominee or beneficiary in the event of the policyholder’s sudden death during the active policy term. These insurance plans are more affordable than regular life insurance plans and easy to purchase. They can prove useful for NRIs to secure their family member’s financial future and help them become independent. Many insurance providers offer add-ons or riders for term insurance plans, such as critical illness cover, accidental death, disability cover, or premium waiver cover.

Child Plans

NRI child plans are designed to facilitate saving to help NRI secure the future of their children and help the family account for the kids’ education and other major expenses. These insurance plans offer many features, including guaranteed returns, the scope to increase coverage, flexibility to include add-ons like waiver of future premiums, and critical illness cover for enhanced protection.

Retirement Plans

NRI retirement plans are crafted to help generate a regular stream of income for the insured after they retire. These retirement plans can be bought through the purchase of annuities, which offer a guaranteed stream of payouts for prefixed time.

Unit Linked Insurance Plans

Unit Linked Insurance Plans or ULIPs are essentially a type of insurance policy that smartly combines the perks of life insurance and investment. NRIs can put their money in ULIPs just like regular Indian citizens. In case the policyholder passes away suddenly during the insurance policy term, the insured’s family will receive a promised death benefit. However, if the policyholder survives the insurance policy term, they will receive earnings based on the performance of the investment units linked to the policy.

Besides these, some insurance companies may offer other plans for NRIs that cater to their specific needs and requirements. Individuals can check them and pick one that suits their immediate and future needs the most.

Who Can Get an NRI Life Insurance Plan in India?

NRIs who fall under these categories can purchase NRI life insurance in India and reap their benefits –

  • Non-Resident Indians (NRIs)

Indian nationals with a valid Indian passport. It does not matter if they are currently residing in another nation temporarily.

  • Person of Indian Origin or Overseas Indian Citizen: Foreign nationals besides Bangladeshi and Pakistani citizens may be deemed eligible if they meet the following requirements:
  • The individuals were previously Indian passport holders.
  • They or their ancestors or parents were Indian citizens according to the Citizenship Act of 1955 or the Constitution.
  • The individuals are married to an Indian citizen.
  • Foreign Nationals

Foreign nationals, who are living in India, are deemed eligible for NRI life insurance. However, the requirements and documentation for them may vary slightly from one insurer to another, but all leading insurance providers in India follow certain rules when issuing NRI life insurance to the citizens of certain nations. This is why it is advised to find out if one’s country of residence is blacklisted by the insurance provider’s list in India.

Documents Required for NRI Life Insurance Plans in India

NRIs buying a life insurance plan in India might need slightly different paperwork than those required of resident Indians. It is essentially the specific KYC documents that may vary among insurance companies. However, a few basic documents required by the insurers remain the same across all companies in India.  Here’s a list of the common documents –

  • Government-issued national ID card or resident card of the residence country. This could include the NRI applicant’s valid passport with a current overseas address.
  • Driver’s license with current overseas address.
  • Utility bills like – mobile phone bills, water bills, telephone bills, or gas bills, dated within the last 3 months and having their current overseas address.
  • Credit card statements of a minimum of the last three months that were issued to the applicant’s overseas address.
  • Copy of resident or work permit that’s a minimum of three months old with their overseas home address.
  • Employer’s certificate confirming the home overseas address.

In addition, NRI applicants would be asked to provide these key documents –

  • Proof of age
  • Copy of passport
  • Proof of income
  • Medical records

Individuals should ensure that they have all of the essential documentation before proceeding to apply for an NRI life insurance policy. This could include proof of age, overseas address, proof of identity, passport, medical history, and record of income.

It is important to check the full list of documents on the insurer’s official website to ensure they have everything they could possibly need before applying.

Reasons NRIs Purchase Life Insurance in India?

Non-resident Indians should consider getting a life insurance policy in India for several reasons, including to financially secure their family members who are dependent on them, in case of the insured’s untimely death.

The financial cover would ensure that their outstanding debts would not burden their loved ones or dependents.

Getting life insurance will help NRIs diversify their investment portfolios and, at the same time claim tax benefits, if any. Above all, based on the type of policy, it will help individuals build wealth or develop a safety net for their family members.

That said, to maximize the benefits of NRI life insurance, non-residents should get the same from a recognized insurance company. This will ensure that their beneficiary has a smooth claim settlement process and timely access to the sum assured.