Does Your Indian Life Insurance Policy Provide You Cover Abroad?
May 23, 2022 Mutual Fund
Life Insurance provides financial security to the policyholder’s family so that they continue living the same lifestyle without any compromises due to the financial instability caused by the sudden unfortunate demise of the policyholder. If you are the family’s sole breadwinner, you might have thought hundreds of times about securing your family’s future with the right life insurance policy. Nowadays, with insurance companies aggressively promoting different life insurance policies, there is an increased awareness about financially protecting ourselves and our families with adequate life insurance cover. In today’s fast-paced lifestyle, it is an ultimate solution that ensures your loved ones are financially protected In case of an unfortunate demise of the insured.
Due to increased awareness, many people buy life insurance policies as soon as they start working. However, when the life insurance policyholder has to leave the country temporarily due to a job, business opportunity, study, training, etc., they often wonder whether the Indian life insurance policy will be valid in a foreign land.
If you, too, are looking for the answer to this question, here is some good news for you! Moving to another country temporarily will not affect your life insurance cover. The life insurance policy will remain valid as long as you timely pay the premiums.
Hence, life insurance, especially a term plan, is an ideal investment not only for resident individuals but also for Non-Resident Individuals (NRIs) and Persons of Indian Origin (PIOs). It is an important step towards creating a financial safety net for your family before leaving the country. However, before moving to another country, it is crucial to understand the terms and conditions associated with it.
Validity of Life Insurance If You Move Abroad
Moving to a different country for professional assignments or personal reasons can be challenging in so many ways. You have to adapt to a new lifestyle and environment. Besides, you have to take care of your finances, including debts and investments.
As discussed earlier, your life insurance coverage does not get impacted if you move to another country, provided you pay the premiums on time. However, it is advisable to inform your insurer beforehand that you are moving abroad by specifying the reason for relocation. The life insurance cover overseas might come with certain terms and conditions that the insurer can explain to you if you inform them in advance. These terms and conditions may depend upon the type of life insurance you own and the policy agreement. Usually, the insurers do not ask for any documentation when you move abroad, but informing them in advance will avoid any future disputes and make the claim settlement process easier for your family.
However, some insurers insist on providing additional documents if you are an NRI or PIO. Here are some life insurance points to be considered for people moving abroad for professional or personal reasons or PIO and NRI life insurance (we are considering a term life insurance policy as it is the most popular type of life insurance):
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The policyholder must be an Indian citizen at the time of policy purchase.
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The policyholder must not have applied or must not be applying in the near future for citizenship of a foreign country.
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If you are an NRI or PIO, you can buy a life insurance policy either in person when you visit India (by fulfilling the procedural and underwriting formalities) or online when you are in a foreign land (subject to verification by a notary, Indian diplomat, or an official of the concerned Indian embassy abroad).
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Some insurers do not extend life insurance coverage to certain countries classified as high-risk countries by the insurer. Hence, informing the insurer and knowing the terms and conditions is of utmost importance.
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The policy tenure generally ranges from 6 months to 25 years.
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The minimum entry age is typically 18 years, and the maximum entry age could be 55 or 60 years, depending on the policy terms.
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The sum assured offered depends upon several factors, such as the NRI's job, country of residence, income, etc. It typically ranges between 2 lakhs to 1 crore.
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An NRI/PIO has to provide the documents required by the insurer, such as income proof, health report, passport copy, copy of employment contract containing the compensation details, personal financial questionnaire, etc. However, if you are a resident moving abroad, you might not be asked for additional documents by the insurer.
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If you hold a life insurance plan in the event of your unfortunate demise overseas during the policy term, your family (the nominee) is entitled to receive the death benefit. The insurer will pay the sum assured to the nominee in lump sum as per the policy guidelines.
Are other types of insurance valid outside India?
However, you should know that other types of insurance, such as health insurance and motor insurance, are not valid outside India. A health insurance plan is meant to cover medical expenses within India. Most health insurance policies come with geographical restrictions that say that the medical expenses incurred outside India will not be covered under the policy. Therefore, citizens leaving abroad for studies, jobs, business opportunities, personal reasons, etc., are advised not to rely on the health insurance policies purchased in India and buy health insurance plans in the country they are moving in.
To Conclude:
With a large number of Indians staying abroad for different reasons, knowing whether the Indian Life Insurance Policy covers you abroad holds significance. Although most policyholders enjoy life insurance cover outside India without any issues, it is advisable to inform the insurer in advance before moving to a different country and understand the terms and conditions to avoid any future disputes. Most importantly, it is necessary to review the life insurance policy depending on the duration of stay overseas while the family is left behind. Moreover, if you are planning to move there permanently, it makes sense to buy life insurance from the country you are moving to.
