India has always been a country where the individuals believe in saving funds for their future and providing sufficient aid for oneself as well as one’s parents. Non-Resident Indians (NRIs) or Indians who reside abroad also understand the need to invest in life insurance companies to safeguard the financial interest of their loved ones. Largely, they do this through their NRI account.
Insurance is one of the most popular financial instruments that the countrymen invest in. This scheme is not only preferred by Indians residing in India but also by those settled abroad in a foreign land.
Taking this awareness and need for insurance, the Foreign Exchange Management Act (FEMA) has permitted the NRIs as well as the People of Indian Origin (PIOs) to purchase term insurance schemes in India. If you are a Non-Resident Indian who is looking for an affordable protection plan in India, there are a few new and interesting plans that must be considered. These plans come with one of the most economical premiums in the world which can suit everyone’s needs.
Before you jump into choosing one insurance scheme over others, you should know the basic facts about investing in these instruments:
Is Physical Presence Necessary while Buying a Policy?
Although this criterion varies from company to company, it is generally not required. Nowadays, most of the activities take place online which is cost-effective as well as time-efficient. Another benefit of going online is that one can easily compare several opportunities available in the market and buy the plan that suits one the best.
However, all these facilities come at additional costs. For example, purchasing a policy from abroad requires you to carry out a medical examination and share the report with the insurance company. In case, you are present in India, the medical check-up can be conducted there and then. These days, several insurance companies also conduct telemedical examinations for the convenience of the NRIs.
Remitting the Premium Through NRI Accounts and Other Methods:
With a huge increase in the number of individuals migrating overseas for jobs, the number of NRI account holders has also increased in the past few years. Individuals working abroad have their families, including spouses and parents, still residing in India. It can be said that these families can manage to continue their insurance plans seamlessly through their pre-existing local bank accounts and several tie-ups with insurers even if the main policy- holder resides internationally.
However, the NRIs and PIOs can take up paying the premiums on their end with the help of their NRI accounts. In case the insurance policy is issued in some foreign currency, the NRI account, particularly the NRE or FCNR account can be used to pay the premium. If the currency is in Indian Rupee, the NRO account, another type of NRI account can be of great help.
An NRI can remit premium to the insurance companies in any of the following ways:
1. Sending Direct Remittances from Overseas
Sending direct remittances from overseas via various banking channels in an approved manner. This can be done by drawing Indian Rupee drafts in favour of the insurer or by Money Orders.
2. Funds Held in the Non-Resident Accounts
Using the NRI accounts in a way to pay out the funds held in the Non-resident account or Foreign currency account with any Bank in India.
3. Drawing Cheques on the Bank Accounts
Drawing cheques on the bank accounts held in India in the name of the Non-resident policyholder who owns an individual bank account or a joint account with any family member.
4. Drawing Cheque by Family Members
Drawing a cheque on an account held by an Indian resident parent or spouse of the policyholder either in their name or joint names with other family members.
5. Absolute Assignee
In case the policy is absolutely assigned to an Indian resident, this can be done directly by the absolute assignee in India.
6. Policies Issued to Employees
Through the employers in respect of the policies issued to employees transferred abroad by them.
7. Paid in Cash by Family Members
Though an NRI account is a convenient way to fill the premium, it can also be paid in cash by the resident family members of the Non-Resident Indian. However, the depositors shall have to produce a letter stating their relationship with the policyholder.
Thus the Indian government, along with the Foreign Exchange Management Act (FEMA) has made the process of remittance rather smooth and efficient. Today, the premium can be filled from the luxury of your homes with just a few clicks. Children can maintain insurance policies of their parents from overseas without any hassles. Spouses can take care of each other and their kids and continue paying the premiums even if they are transferred to another country for a year or so. Digitalization paired with opening an NRI account is unquestionably a development that has brought the world closer and helped people maintain their finances fluently.