Life insurance policy is an essential constituent of financial planning, which holds true for the NRIs (non-resident Indians) too. NRI life insurance policy plays an imperative role in securing NRIs’ and their families’ financial security and stability. As NRIs face unique challenges due to their international lifestyle, having a comprehensive life insurance policy becomes even more important. This article aims to explore the common challenges faced by NRIs when it comes to life insurance and provides practical solutions to overcome them.
Reasons for opting for NRI Life Insurance
There are multiple reasons for NRIs to consider life insurance policies. Firstly, NRI policy ensures that in the unanticipated event of a policyholder’s death, their family members will get relevant financial support to cover the expenditures like children’s higher education, debt repayment and regular living expenses. It serves as a safety protection net, providing mental peace to NRIs away from their families for long time periods.
Next, the NRI life policy assists individuals protect their assets in their home country. Many NRIs have their own investments, properties and businesses set up in India and holding an NRI life insurance policy can safeguard these assets against unanticipated times, ensuring financial security and stability for their dependents.
Moreover, the NRI policy comes with tax benefits as per the Indian IT Act. Premium paid on policies qualifies for tax deductions, lowering the NRIs’ tax liability. So, investing in life insurance plans for NRIs is a financially prudent decision. Besides, considering life insurance plans, NRIs must also consider availing health insurance plans. This is because the costs incurred in most countries outside India are often expensive. Certain operations and treatments can be performed at a lower cost in India provided the NRIs have an adequate health insurance plan.
Challenges of NRI life insurance and crucial solutions
Challenges in documentation
NRIs often face challenges in completing the necessary documentation for life insurance due to their overseas residence. Insurance providers should offer online application facilities and provide guidance on the required documents, including attestation and submission processes, to simplify the documentation process.
Limited product options
NRIs may find limited options for life insurance plans compared to residents of India. Insurance providers need to develop and offer a diverse range of life insurance products specifically tailored for NRIs, considering their unique needs and preferences, thereby expanding their product offerings.
Challenges in premium payments
NRIs may encounter difficulties in paying premiums regularly due to their overseas location. Insurance companies can offer flexible premium payment options, such as online payments, automatic deductions, or tie-ups with international banks, easing the premium payment process for NRIs and ensuring timely payments.
Issues with medical assessment
NRIs may face challenges in completing the required medical examinations, as they are not always available in their current location. Insurance providers can establish tie-ups with international medical centres to facilitate medical examinations for NRIs or allow for medical examinations to be conducted in India during periodic visits, addressing the medical examination challenges.
Fluctuation in currency
NRIs witness currency fluctuation risk, which may affect their policy coverage value. Insurance providers should offer options for policyholders to choose the currency in which they prefer their coverage to be calculated, providing stability and certainty in coverage amounts.
Limitations on coverage
NRIs might face limitations on coverage due to factors like residency status or occupation. Insurance companies should offer policies that consider the unique circumstances of NRIs, providing comprehensive coverage without any restrictive limitations, thereby expanding coverage options.
Disputes related to payment of premium
Disputes related to premium payments and calculations may arise due to differences in currencies and exchange rates. Insurance providers should clearly communicate premium payment terms, provide transparent calculations, and offer dedicated customer support to promptly resolve any premium-related disputes.
Repatriation policy benefits
NRIs may face restrictions on repatriating policy benefits or claim amounts to their current country of residence. Insurance companies should clearly communicate repatriation guidelines and explore tie-ups with international banks or payment platforms to facilitate smooth fund transfers and address repatriation restrictions.
NRIs may inadvertently allow their policies to lapse due to a lack of timely premium payments or communication challenges. Insurance providers can implement proactive reminders for premium payments, offer online policy management portals, and provide dedicated customer support for policy-related queries, reducing the chances of policy lapses.
Complicated tax rules
NRIs require navigating complicated tax regulations in both their country of residence and India, which impacts their policies. Providers of life insurance must provide expert guidance on compliance of taxes, and offer necessary services for filing of tax, ensuring ease and compliance of tax-linked processes.
Residential country change
NRIs usually change their residential country. This might impact their life insurance. Providers of insurance can provide flexible insurances that permit seamless transition on the change between countries, accommodating changes in the residency with zero impact on coverage.
NRIs might have restricted awareness regarding the life insurance policy options available. Providers must conduct distinct awareness programs and campaigns targeting NRIs, through offline and online modes, highlighting the significance of NRI life insurance, and their specific benefits, enhancing awareness among the NRIs.
Credibility and trust
NRIs might witness concerns linked with the credibility and trustworthiness of policy providers. Insurance companies must emphasise their credibility, reputation and financial well-being through customer testimonials, transparent communication, and association with reliable bodies, establishing credibility and trust.
Difficulties with claim settlement procedure
NRIs might witness difficulties in settlement procedures, especially if they are not present physically in India. Providers must establish a dedicated claim settlement procedure for NRIs, allowing remote documentation, online tracking, timely resolutions, etc., simplifying the thorough process of claim settlement.
Language and cultural hindrances
NRIs may encounter cultural and language barriers when interacting with insurance providers in India. Insurance companies should have dedicated customer service teams proficient in multiple languages, ensuring effective communication and addressing cultural sensitivities, overcoming cultural and language barriers.
NRI policy is essentially necessary for the NRIs, as this insurance offers asset protection, financial stability and security, and tax advantages. While there are various challenges linked with NRI policy, proactive solutions can help address the issues. Policy providers require understanding the specific preferences and needs of the NRIs and based on this form a customer-centric insurance and services to meet their unique needs. By outmanoeuvring the challenges involved, NRIs can get themselves comprehensive coverage, ensuring the safety and financial well-being of their near and dear ones and mental peace.