Make sure you understand all the terms and conditions related to the payment and repatriation processes, as well as the tax implications.
Most Non-Resident Indians (NRIs) are known to be financial savvy. They tend to have a diverse portfolio of investments, both in the country of immigration and in India. Without a doubt, they are aware that insurance plays a fundamental role in safeguarding the physical and economic well-being of the family. But the question you need to ask yourself is: do they need to have insurance in India if they are not here? and How Change of Residence Affects NRI Health and Life Insurance Plans?
To understand the need for Indian life and health insurance like NRI, the main question one must ask is whether he will continue to have personal and financial interest in India in the long term. If the answer is "yes," then buying insurance or continuing with an existing plan should be on the agenda. Before we talk about the reasons why non-residents should consider national insurance coverage, let's understand how the change in domicile status affects eligibility.
How Change of Residence Affects NRI Health and Life Insurance Plans?
Most life insurance plans offer comprehensive coverage and a change in residence status does not affect the validity of an insurance plan. Even if something unfortunate happens to you outside of India, your beneficiaries can still receive claim benefits.
If you have an existing life insurance plan and are looking to immigrate, it is recommended that you update your insurance provider regarding the change of residence. Some insurers may require a statement. Generally, there is no difference in premium for resident or non-resident policyholders. However, your service provider may reassess the terms of the insurance if the country you are moving to is deemed "high risk" due to civil or political unrest, high crime rate, or low standard of living.
Non-residents can continue with their existing plans or buy a new one, either in India or in their destination country. Ideally, you should do this while visiting India as it saves you additional medical and administrative costs, which you would have to bear to propose a new policy abroad.
Health insurance benefits, on the other hand, can only be claimed within India or within the geographic limits specified in your health plan. Health insurance protection kicks in when you are within home jurisdiction, but is quite redundant (to yourself) when you are abroad. Those who travel frequently are better off with separate health plans for each location.
Reasons to consider home insurance
Affordability - Insurance costs, especially health insurance in India, are among the cheapest in the world. While the average annual health plan in India costs around Rs 10,000 to Rs 15,000, the average American resident pays around US $ 6,000 (Rs 4.4 lakh) for similar coverage. Low-cost health care service, low insurance penetration, government incentives, and IRDAI's non-predatory guidelines are some of the factors that keep insurance costs in check.
Protect Family Interests - Life insurance serves as a financial safety net for your dependents in India (if applicable). It ensures a secure future for your spouse / parents and the continuing education of your children, among other shared goals. The income can also be used to pay off any outstanding loans and liabilities you may have, such as a home loan or car loan, thereby securing an asset for the family.
Ongoing benefits - Health problems can arise at any time. Having a national health plan mitigates the financial risk of any unexpected health problems while you are here. You may also need to continue with a health insurance plan if you are the primary policyholder of a group or a family floating plan, where the other beneficiaries reside in India.
It should also be noted that there is a mandatory waiting period for most critical illnesses. By investing in a health plan at an early age, you can overcome the waiting period and be eligible for insurance benefits if a major health problem arises later. This benefit can be invaluable if you intend to return to India permanently in the future, or even take advantage of the advanced and inexpensive medical facilities in the event that you are diagnosed with a critical illness.
Save Tax - NRIs who earn a passive source of income in India through investments, rentals, etc. they can offset a portion of their tax liability corresponding to the amount paid for life and / or health insurance premiums under Section 80C and 80D, respectively. This is applicable in select income cases where flat rates apply, and may not apply to special rates such as equity (any duration) and debt (long term).
In conclusion
Make sure you understand all the terms and conditions related to payment processes and repatriation (if applicable), tax implications in India and the country of immigration. The right set of insurance plans can prove to be a strategic tool in achieving your long-term goals and protecting your loved ones.
