Why NRIs should secure their lives with Indian insurance | Mint

Why NRIs should secure their lives with Indian insurance

The premium of insurance policies in India is in some cases lower than what is on offer in other countries, say experts. (iStockphoto)
The premium of insurance policies in India is in some cases lower than what is on offer in other countries, say experts. (iStockphoto)

Summary

Financial experts say it offers wider coverage, helps during a crisis on their visits to the country.

Insurance is integral to financial planning, particularly because it helps mitigate losses. That’s the reason why financial experts always tout the benefits of both life and health insurance. But, are these policies merely for resident Indians or do non-resident Indians (NRIs) also need them? Many NRIs are unsure about this. UK-based Jaya Mishra (33) is one of them. She had an individual health insurance policy in India but discontinued it when she moved to the UK. She even pays a premium there to avail of UK’s National Health Service (NHS). “My husband and I visit India once or twice a year but we are not sure if we’ll ever come back and settle down here. If we do, we shall evaluate Indian insurance policies," says Mishra. The couple does not have a term life insurance policy either.

Like Mishra, many NRIs, too, have the perception that they don’t need insurance policies from India. Some say they will get it if they ever decide to move back to India permanently. And many do not even buy a proper travel policy to cover their short trips to the country.

Insurance experts say this is a grave mistake. “One of my clients visited India on a holiday recently. His children had to be hospitalized here due to lactose intolerance. He had to shell out about 2-3 lakh on hospital bills within a couple of days. He did not have a health insurance policy or a travel policy and so had to pay everything from his savings," says Nisha Sanghavi, a certified financial planner and co-founder of Promore Fintech.

Sanghavi advises all her NRI clients to protect themselves with life and health cover as a first step before planning investments. “The kind of lifestyle they lead, they need a term plan of at least 2-5 crore and a health plan with a high sum insured of about 50 lakh. NRIs don’t realize that they will not be eligible to get a life or health cover in case they contract a major disease later in life," she says.

Moreover, not many NRIs are aware that they are eligible for the 18% refund on the premium they pay for life and health policies. “They can claim a GST (goods and services tax) refund from the insurer in India if they pay the premium amount from an NRE account. They need to submit a declaration, along with a six-month bank statement of their NRE account and a TRC (tax residency certificate), to get the refund." says Rhishabh Garg, head - term insurance at Policybazaar.

(Graphic: Mint)
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(Graphic: Mint)

Protecting Life

Here are the reasons why NRIs need to buy the term plan from India and not abroad. “If you have dependents in India, you should certainly buy a term plan from Indian insurers. If you are well-settled abroad, it is better you get the policy in the country of your residence so that your dependents don’t have to travel back to India for paperwork," says Mahavir Chopra, founder, Beshak.org.

Compare the prices between India and the country where you stay. For example, a 2 crore term plan in India would cost you around 22,000. However, a similar coverage is available at 34,892 and 32,783, respectively, in UAE and Singapore. In the UK, you can get it for 13,901 (see graphic). “I had a client in Japan who had no relatives in India. Since the premium for a term plan in Japan was around the same level as one in India, we recommended that he buy the term plan in Japan itself," says Chopra.

Ajay Meena (34), a sales professional based in Qatar, had a term cover of 75 lakh when he was in India. He opted for an additional sum assured of 1.25 crore from India itself because the premium was much cheaper compared to what was offered in Qatar for a similar cover. Moreover, his entire family including his wife resided in India.

Are all NRIs eligible to get the term plan? Garg of Policybazaar says yes. “Even if you have a foreign citizenship, you can still buy a health and life plan from India. All you need is an OCI (overseas citizenship of India) certificate," he says.

The eligibility in terms of your health profile is a different matter. Insurance companies may ask you to go for medical tests when you apply for a term plan. If you get the tests done abroad, you will have to bear the cost yourself. “We recommend our clients to take it when they travel to India because insurers pay the cost of the tests in that case," says Sanghavi. One should still check with insurers about the eligibility for a term plan without medical tests. “Medical tests may not be required if the coverage is less than 2 crore in risk-free profiles," says Sanghavi.

Protecting health

Kaustubh Konor (38) works in the US and has got health coverage from his employer there. But he has bought a health plan in India as well. “The coverage in the US is not wide enough. Moreover, I am on an employment visa. I have no clear plans to settle down there. I have bought a comprehensive health plan of 25 lakh coverage," says Konor, who has also bought a plan for his parents in India.

Ashish Achit (39), however, has bought a private plan in Dubai along with his Indian health policy so that he gets better coverage. His international plan is a combination of life, health and critical illness cover. “I travel to India twice or thrice in a year. I see more value in having a full-fledged family floater plan instead of relying on the travel plan every time I visit India," he says.

If any NRI feels the premium is unaffordable on a health plan, they can opt for a deductible. This is the amount that one has to pay toward medical bills before the health cover is applicable. It helps in reducing the premium amount. “Our ReAssure 2.0 policy offers deductible up to 1 lakh on different policy coverages. It can enable NRIs to get a discount up to 40% on the premium. When they move back to India, they can buy back the deductible to make it a full-fledged policy. Continuity benefits such as waiting period for pre-existing diseases stay in this case," says Bhabatosh Mishra, director- claims, underwriting and product, Niva Bupa Health Insurance.

Notably, deductibles are different from super top-ups. “Super top-ups cannot be converted into a full-fledged plan. Only a few plans in India offer the facility to buy back deductibles," says Bhabatosh.

Is it wise to go for deductibles? That depends on your financial situation. “Ideally, NRIs should go for a comprehensive high sum-assured policy. If the premium seems unaffordable, deductibles and co-payment are a good option to reduce it. Do prefer a full-fledged policy if you can afford it. The simpler the coverage plan, the better it is," says Amit Chhabra, chief business officer-health insurance, PolicyBazaar.com.

Separately, some companies offer discounts on premium to NRIs. “HDFC Ergo offers 40% discount to all NRIs who buy a health plan because chances of their making claims are lower. NRIs should enquire about it," says Chhabra.

NRIs tend to earn better than their peers in India. Considering GST refund and a few discounts, they can buy a decent life and health cover at affordable rates. The benefits thereabout could be much higher than the premium paid.

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