Should NRIs buy life insurance in India?
Many of you may have started working in a foreign country and many have also settled there. However, when financial security of the family members is concerned, no one wishes to take any chance. Life insurance eases this task and helps you protect your family members financially.
Due to emotional attachment to the motherland, many NRIs wish to have something that connects them to India and insurance is one such thing. However, the question is whether you can buy insurance policies in India? Yes, FEMA (Foreign Exchange Management Act) allows you as an NRI to buy any insurance policy in India that fulfils your requirements.
How can NRI buy life insurance in India? Online would be a better option as you do not need to visit India to buy life insurance. You can directly buy it online after comparing the policies and send across the required documents to the insurance company in India. These days, insurance companies are accepting applications without medical check-ups, subject to certain terms and conditions. Payment of premium depends on the currency denoted in the policy document. If the currency denoted in the policy document is a foreign currency, then you have to make payments in foreign currency using your NRE or FCNR account. If it is denoted in Indian rupees, then you have to make payment in rupees using your NRO account. The same applies to the payment of claims you would receive.
Is there any possibility of application getting rejected? Yes, if you reside in a high-risk country, then there is a possibility of your application getting rejected or the insurance company demanding higher premium. However, if you reside in a low-risk country, then your application can get accepted easily. High-risk country is a country which is more prone to issues related to civil disturbances or military conflict or has an unstable government with constant violent attacks taking place on its citizens, etc. On the contrary, low-risk country is a country where the civil environment is peaceful with a stable government having proper law and order in place.
Now, after understanding about buying life insurance in India, the question is whether you should buy one? It does not make any sense to buy a life insurance policy in India if you are an NRI. The reason being the premium. If we convert the premium charged from USD to INR by the insurance companies in the US, the premium charged for Rs 1.5 crore sum assured for a 40-year old male who is not a nicotine consumer comes to around Rs 980 per month, whereas all things being constant, the premium charged by the insurance companies in India comes to around Rs 1,500 per month. So, it makes a lot more sense to buy it in the foreign country where you reside. The example, though, considers only the US insurance companies' policies and premiums. However, if you are residing in a country other than the US, then it is recommended you compare the premiums charged by the insurance companies in the country you reside vis-a-vis India to get a better deal.