Things to consider before buying life insurance as an NRI

Buying a life insurance policy has been a traditional way of investing money. While it was originally a means of investment, more people have started to express interest in life insurance plans for their true nature of protection. This is not only true for resident individuals, but also for non-resident individuals or NRIs. If you are an NRI and looking forward to buying a life insurance policy, here’s a complete guide to all things you need to consider.

But before understanding what you must account for, let’s understand who is an NRI.

A non-resident individual or NRI can be defined as a person who-

  • has resided in India for less than 182 days during the previous financial year
  • resides out of the country for employment or business purposes
  • stays outside India for an uncertain duration.

It is also important to understand the difference between an NRI and a person of Indian Origin or POI. POI are those individuals who have held a passport at any time in the past, or the person, their parents or their grandparents are citizens, of India by the virtue of Citizenship Act of 1955, or their spouse is an Indian citizen.

Since a life insurance policy is an essential requirement for all, the Foreign Exchange Management Act of India (FEMA) of 1999 allows NRIs to purchase life insurance policies. Thus, as an NRI, you can also avail of coverage by life insurance, meaning that you can purchase a policy in India. In addition, the policies for NRIs are customisable, which helps them in addressing different financial needs.

Here are considerations to keep in mind as an NRI when buying a life insurance policy:

  1. Checking your eligibility

The primary thing to look for is eligibility when buying life insurance, meaning if you are allowed to purchase a policy or not. There are certain conditions subject to which NRIs and POI can purchase a life insurance policy in India. A valid passport is one of the critical documents that NRIs need to have. Hence, you need to check with your insurance company before proceeding to buy a life insurance cover.

  1. Selecting the right insurance company

Once you meet the eligibility criteria, the next step is looking for a reliable insurance company. Among the different insurance companies, selecting one must be based on the policy features offered for which you can make use of a life insurance calculator. Additionally, factors like management’s history, the claim settlement ratio of the insurer, testimonials of the existing policyholders, past track record, and parent group’s experience must be considered.

While there are no specific policies to be offered to non-residents, some insurance companies have tweaked their products to fit more appropriately for NRIs. Further, the process of issuing these plans is also restructured in some cases where the insurer helps in the documentation process and other requirements such as medical tests, etc.

  1. Being informed about tax implications

Once you have shortlisted a suitable plan and insurance company, you must also be informed of the tax implication when buying a life insurance plan. The effect on your income tax returns, both, in India, and in the country you reside, must be checked. The investment stage, accumulation stage, and maturity stage, are three stages that may attract a tax implication. In India, all three stages are exempt for NRIs subject to certain conditions.

Further, the FATCA declaration is also something that as an NRI policyholder, you need to be aware of. In addition, to avoid TDS deductions at maturity, appropriate tax residency certificates and Form 10F serve as valid documents. Hence, when choosing a life insurance policy, consult your financial advisor in advance.

  1. Identifying the payment mode

Depending on the insurance policy’s terms and conditions, you must check the eligible payment methods. This will ensure you need not face hassles at the time of making subsequent payments.

There are two ways of making the payment — one, a foreign currency dominated policy where the premium is paid in foreign currency or through an NRE/FCNR account; second, a rupee dominated policy where the premium can be paid via NRO accounts.


  1. Knowing about the medical examination procedure

When you buy a life insurance policy, you need to undergo a medical examination procedure too. For NRIs, there are two ways of doing it; one, to fly down to India for a medical check-up, or second, to send the report from a medical facility abroad. In the latter case, you need to bear the charges. However, if you have bought a policy specifically targeted for NRIs, you can get yourself checked at one of the medical facilities that have a tieup with the insurer.


These are some factors that you, as an NRI, must consider when buying a life insurance policy. To know which policy is best suited for you, you can compare the different plans using a life insurance calculator.