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BUSINESS & FINANCE—LIFE INSURANCE FOR NRIS sethuraman sathappan agm, scot iabank, mumbai


It has become a common feature that some life insurance agent would be waiting to meet you when you are on a visit to India. With more and more life insurance companies are coming up in India the problem for you is compounded. You may also be receiving calls from unknown persons or relatives who are insurance agents soliciting insurance policies.


The concept of insurance is a great one and we should appreciate the same. However, I am not going to tell whether Insurance is necessary or not which you are all very well aware of. I am going to discuss the things / precautions you have to bear in mind when you are taking an insurance policy from an Indian insurance company. In India there are many insurance companies and the rules may slightly vary between one insurance company and other insurance company. However, salient features of general in nature are discussed in this article.


Basic requirements to take a life insurance policy from an Indian insurance company:


Green card holders are not allowed to take insurance policies in India. Also he / she should not have applied for or planning to apply in the near future for acquiring citizenship of his /her present country of residence or any other country.


The life to be assured must be an Indian National or a person of Indian origin temporarily residing in the country of his / her present residence and s/he must hold a valid Indian passport.


People of Indian Origin having foreign nationality and residing in foreign countries (PIO) are not considered as NRIs for the purpose of allowing insurance. There are separate rules for them to take policies which are discussed separately in this article.


Policies are generally issued in Indian Rupees only. However, branches and Joint Venture Companies of Indian insurance companies issue policies in their local


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currencies. e.g. USA branch of an Indian insurance company issues policies in USD.


NRIs are allowed insurance on their visit to India where all formalities are completed during their stay in India. In such cases they would be treated on par with Indian lives for the purpose of allowing insurance.


Generally, all types of plans are allowed subject to the conditions that


1. Critical Illness Benefit is not granted.


2. Term Rider Benefit would be restricted to certain limit of Sum assured


3. Sum Assured would be restricted in respect of term insurance plans.


NRIs may obtain insurance cover under Non-Medical Scheme subject to certain restrictions, some of which are listed below:


1. Applicable if insurance is obtained during visit to India


2. Maximum age at entry would be 45 years


3. Plans with high risk cover and term rider benefits would not be allowed.


4. This scheme is applicable to those NRIs who are residing in certain countries.


The rules regarding granting insurance cover to NRIs during their visit to India would be similar to those applicable to Indian Lives.


Policy in Indian Rupees or Foreign Currency


NRIs are allowed to take policies in Foreign Currency through the insurance companies situated in India or their offices in abroad provided the premiums are paid in foreign currency from abroad or through the NRI account in India.


Policies denominated in Indian rupees, premiums can be paid from NRO account also.


Existing policies taken while in India


Policies taken while in India will continue in Indian Currency even after the policy holder moving to foreign countries as NRI. It is necessary that the policy holder have to inform the insurance company about the status and address change. There may be certain forms also to be completed.


Returning Indians


Polices issued out of foreign offices of Indian insurance companies can be continued when the policy holder returns to India. If the policy is more than 3 years old, he can continue paying in foreign currency or he convert the policy to an India rupee policy. In case, the payment is continued to be made in foreign currency, the maturity proceeds can be credited to the policy holder‘s account abroad or RFC account.


Settlement of Claims


The basic rule is that the settlement of claims on rupee life insurance policies in favor of claimants resident outside India will be permitted in foreign currency only in proportion in which the amount of premiums paid in foreign currency in relation to the total premiums payable.


Non resident beneficiaries of insurance claims / maturity / surrender value settled in foreign currency may be permitted to credit the same to NRE or FCNR account, if so desire.


September 2011


People of Indian Origin having Foreign Nationality residing abroad.


People of Indian Origin having Foreign Nationality and residing abroad are allowed to take Indian insurance policies under medical scheme only. Policy in Indian Currency would be issued, only during their stay in India and the claim would be paid in India in Indian Currency only. There is a restriction on the maximum amount of the policy also.


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