Warding Kindred Across Seven Seas

Family always holds a special place in everyone’s heart, no matter whether they live with you or in a different country. And with ageing parents, taking care of them is a matter of great concern, especially when you are separated through the seven seas.

So, what do Non-Resident Indians (NRIs) do in such cases?

Falling back on insurance is definitely a solution, one should look at when living abroad with parents back in India. Needless to say an NRI often faces a set of liabilities, when a sole breadwinner.

One of the major drawbacks being extremely high cost of living and medical expenditure. Also most  countries do not allow parents to come and live beyond six months. This majorly affects the decision of bringing along one’s family from native homeland.

The best tool to solve this problem is to avail a life insurance policy that provides a proper health cover and includes many medical expenses. In fact, it is often seen that a product, which encompasses various benefits, always proves to be a massive respite during a financial crisis arising due to death of the breadwinner.

The importance of a life insurance policy increases multifold for an NRI, if he happens to be the sole breadwinner of his or her family. Luckily, the process to be fulfilled is similar where, the insurer will issue the policy under Foreign Exchange Management Act (FEMA).

Sharing his views, Dheeraj Sehgal, Chief Distribution Officer, Institutional, Bajaj Allianz Life Insurance, explains, “An NRI can buy a life insurance policy while staying in India or even when they are abroad. They need not necessarily be physically present to buy a policy as insurance companies provide NRIs the convenience of buying insurance policies online, from their country of residence.”

Yet, it is best to purchase a life insurance plan before leaving India because of restrictions prevailing in other countries on such purchases  for immigrants.

Now, getting to the point of premium, it is the same for NRIs  and resident Indians.

Premium for NRI consumers, however, should be paid preferably from either a Non-Resident External (NRE) or Non-Resident Ordinary(NRO) rupee account as their tax implications might differ from the rest.

But if the insured is residing outside India and is paying premium through foreign currency, thereby fulfilling the conditions of export  of services, then GST would not  be applicable on it.

“Insurance premium depends upon the risk assessment and profile of an individual. It could also vary depending upon the country where the consumer resides. If the applicant resides in a high-risk country, the premium could be higher. There is no restriction on the mode of premium payment for NRI consumers. It is similar to that of a resident Indian consumer – annual, semi-annual, quarterly, monthly,” adds Bharat Kalsi, Chief Strategy Officer and Head Marketing, Analytics and Corporate Communication at Tata AIA  Life Insurance.

Before making any investment, experts strongly recommend that individuals must evaluate their life goals for which they want to invest and that of their dependents, if any.

One must also consider the changing needs of the dependents at different stages of life to understand the amount of insurance cover that will be needed. It is always better to buy bigger insurance cover for the rainy day.

Investing in equity-based instruments that give better returns is a good option too. There are many available in the market today.

“An NRI can invest in Unit Linked Life Insurance Policies (ULIPs) in India as it may help them to take advantage of India’s equity markets and create a decent corpus for their life goals. ULIPs further provide an added advantage of not attracting long-term capital gains unlike other asset classes,” says Sehgal.

According to experts, NRIs must get clarity on the tax implications in their resident country before availing a life insurance policy in India.

The major trouble arises at the time of disbursing claims. To avoid it, the insurer would require the death certificate of the life assured, original policy document and the nominee’s Know Your Customer (KYC) and also the details of the  bank account.

In some cases, where death occurs in a foreign location, insurers might ask for some additional documents.

Post this, claims are to be settled  in Indian currency, in which case  the amount will be credited to the NRO account.

But in case the nominee desires to receive the amount in foreign currency, the same will be credited  to his or her NRE account as per the RBI guidelines.

According to IRDAI guidelines, claim decision must be made within 30 days of the submission of documents or clarification.

However, where the circumstances of a claim warrants an investigation, it will initiate the same at the earliest and complete the investigation process expeditiously, in not later than 90 days from the date of receipt. And the claim shall be settled within 30 days thereafter.

Considering the physical distance and the time required to cover it in times of emergency, NRIs must consider life insurance plans as their protection and wealth creation tool  to achieve sound financial goals. After all, a smart choice can provide an extra protection to one’s beloved family members in times of peril. And if by buying the right insurance it helps, then why not? 

nirmala@outlookindia.com