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NRI Insurance

A large number of Non-resident Indians (NRIs) working abroad have their families and assets back home in India. Their tenure indefinite, the need for an insurance cover is felt to take care of any uncertainty. The Government of India has recognized the special needs of the NRI and extended risk cover to non-residents at par with resident Indians. Indians overseas can avail of on-line facilities on the internet to buy and manage insurance policies from around the globe. All schemes offered by insurance companies can be availed of by NRIs.

Eligibility for NRI Insurance
  • NRIs staying abroad for employment or business for an indefinite period
  • Indian citizens on an assignment abroad with foreign governments or international agencies
  • Officials of Central and State Government and Public Sector undertakings deputed abroad on temporary assignments or posted to their offices abroad,
  • Indians who have migrated to other countries on a permanent basis

Persons of Indian origin, who have acquired citizenship of another country, can avail of all schemes except certain joint life plans and plans having a term insurance element.

Payment for insurance policy
NRIs can pay for the policy in Indian currency. Insurance premiums can be paid in the following ways:

  • By direct remittance from abroad through approved banking channels in Indian Rupee drafts drawn in favor of insurance company or by remittances through postal channels like Foreign Money Order.
  • By payment out of funds held in Non-Resident (External) Account or Foreign Currency (Non- Resident) Account with a bank in India.
  • By cheques drawn by non-resident policy holder on resident bank accounts held in India in his own name (either solely or jointly with another member of the family)
  • By cheque drawn on account maintained by NRI's resident parent or spouse of policy holder in their own name or joint names with other close relatives.
  • By the absolute Assignee in India wherever insurance policies have been absolutely assigned to a person residing in India.
  • By the employers in respect of policies issued to their employees who have been deputed abroad by them.
  • Premiums can be paid in cash by a resident parent or spouse of the non-resident policyholder subject to his / her submitting a letter stating the relationship with the policyholder.
  • Premiums due on policies issued to Indian students who have gone abroad for higher studies may be collected in Rupees out of the Resident Bank Account in India or any of their representatives in India by cash or cheques.

Payment of claims
The payment of claims or surrender value in foreign currency is possible only in the following circumstances:

  • the policy holder is permanently resident outside India and
  • all the premiums under the policy have been paid in foreign currency or by remittances from abroad through approved channels.

Where the premiums have been paid partly in Indian currency and partly in foreign exchange, the payment in foreign currency is in proportion to the amount of premiums paid by remittance from abroad to the total premiums paid.
A formal approval from the RBI is mandatory when the payment of policy is made in foreign currency.

Maximum insurance cover for NRIs
All terms applicable to resident Indians for the purpose of sum assured, apply to NRIs as well and there is no coverage limit.
For PIOs, the maximum cover is restricted to Rs 20 lakhs for all policies taken together

Loans against Insurance Policy
NRIs enjoy the benefit of taking a loan against an insurance policy in India. The rules governing payment of claims apply on disbursement of loan as well.

Transfer of Policy Papers Overseas
Records of a rupee life insurance policy cannot be transferred from an office in India to a branch office outside India without the consent of the Reserve Bank. Such transfers are legitimate only if transfer of actuarial reserves is not involved or the policy-holder is eligible for a capital transfer from India.

Can a policy-holder take the policy document out of the country?
As per the foreign exchange regulations act, life insurance policies are considered as securities, and export of these documents requires the formal approval of the RBI, giving full particulars of the policy, person to whom the policy is to be sent and reasons therefore.

Rules for assigning an NRI policy
Permission from the RBI is required for assignment of rupee policies held in India by a resident of India in favor of any person resident outside India, or by a NRI in favour of another NRI residing in a different country. Prior approval is not required where the assignment is without consideration in favor of the policy-holder's non-resident wife or other dependent relatives.

Rupee policies may be freely assigned by non-residents in favour of banks or LIC in India for obtaining loans provided the loan amount is paid in rupees in India to the policy-holder or his close relatives or by credit to the policy-holder's NRO account with an authorised dealer in India.

Policy records transferred from one foreign country to another
Transfer of records relating to rupee policies and foreign currency, along with actuarial reserves, from a register in one country to a register in another country can be made freely. If, however, actuarial reserves are to be transferred from India, prior approval of the Reserve Bank is necessary.

Insurance Policy for Persons of Indian Origin
PIOs can avail of insurance policies in India under the following conditions:

  • Unlike NRIs, PIOs cannot purchase an insurance policy through mail.
  • The policies issued are in Indian Rupee Currency only and are issued to the PIOs during their stay in India.
  • All proposals will be under the medical scheme.
  • Joint Life policies and plans having term insurance element are not allowed.
  • The proponents will be required to fill in a Non resident Questionnaire form.
  • The policies cannot be exported out of India.
  • The claim proceeds under such policies will be paid in India in Indian Currency and will not be allowed to be repatriated out of India.
  • The consent of the proponent is to be obtained in advance as the above condition will be typed on the policy bond.
  • The maximum Insurance Cover that can be granted under such cases on individual life shall not be in excess of Rs. 20 lakhs for all policies taken together.

 

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