NRI life insurance: Buy in India or abroad?

For NRIs with significant financial obligations in India, purchasing a life insurance policy in the country can serve as an effective means of safeguarding those commitments. However, NRIs should be aware that buying life insurance in India involves additional documentation, underwriting, and payment requirements compared to residents.

While the process is generally similar to that of residents, NRIs must provide additional information such as proof of overseas residence, passport, TIN/SSN, and income details. Insurers may also require details about the applicant's occupation, country of residence, and source of income, especially when a substantial sum assured is sought.

Some insurers now offer digital application processes and virtual tele-medical examinations, allowing NRIs to complete the entire purchase procedure remotely from abroad. However, the availability of remote medical examinations depends on the insurer, the applicant's country of residence, age, health profile, and the sum assured sought.

The country where an NRI resides can impact underwriting and premium rates, as insurers consider country-specific factors such as geopolitical stability, healthcare standards, occupation-related risks, and local regulations. Depending on the insurer, an NRI's premium may increase if they live in a high-risk country or have a high-stakes job. Conversely, an NRI with a stable job and low-risk country of residence is more likely to have a smooth underwriting experience.

Buying life insurance in India can be cheaper than purchasing international plans, with Indian coverage typically around 50-60% more affordable. The affordability of Indian policies is attractive, especially for NRIs who still have financial responsibilities in India, such as parents, spouses, children, home loans, or properties. Additionally, recent tax reforms have eliminated the 18% GST burden on life insurance policies for both residents and NRIs, making them even more cost-effective.

However, NRIs should weigh the benefits of cheaper premiums against other factors, including currency fluctuations, tax treatment in their country of residence, claim procedures, and the location of their family's financial needs. Ultimately, the decision to buy a life insurance policy in India should be based on a comprehensive evaluation of the NRI's financial situation and priorities.