Buying an insurance policy is a simple procedure.

However, there are certain requirements

that you would need to fulfill as an NRI. The following are the details:

A non-resident Indian should hold a valid passport issued by the Government of

India. The NRI should not be a green card holder. He/she should not have applied
for or planning to apply in the near future for acquiring citizenship of his/her
present country of residence or any other country. Foreign Nationals of Indian
Origin are not treated as NRIs for the purpose of buying insurance.

Insurance cover is canvassed in India and all formalities regarding filling in the
proposal forms, obtaining medical examination report / special medical reports and
Moral Hazard Report should be completed during their stay in India, if not it can be
completed on their visit to India.

From their present country of residence known as mail order business, all or
some of the formalities regarding filling in the proposal forms, obtaining medical
and special reports should be completed in their present country of residence.

Proposals from NRIs will be considered for a minimum basic sum assured of Rs
two lakhs. Sum assured over Rs two lakhs will be in multiple of Rs one lakh.

There is no maximum sum assured limit when all formalities are completed in
India on the NRIs visit to India.

A maximum sum assured of Rs 1 crore may be allowed under Mail Order

Business, i.e., where all formalities are completed in the NRIs present country of
residence. The maximum sum assured to be allowed would be in accordance with
the existing rules for financial underwriting.

For proof of income, income tax returns filed in the country of residence is
needed when the total rated up sum assured exceeds Rs 15 lakhs. If tax returns
are not filed, then copy of employment contract mentioning salary or a certificate
from a Chartered Accountant regarding business or other income can be
submitted. Personal Financial Questionnaire (PFQ) duly filled in and signed by the
proposer and countersigned by the Official filling in the MHR can be accepted as
proof of income up to a rated up sum assured Rs 25 lakhs.

An NRI can buy any insurance policy of his choice. However, the following are
the restrictions.

Maximum sum assured under pure Term Insurance Plans is Rs 25 lakhs

Term Rider benefit will be allowed up to Rs 25 lakhs

Critical Illness benefit will not be allowed.

Proposal under non-medical (special) scheme will be entertained subject to the

following conditions:
Maximum age at entry should not be over 45 years of age.

o
o

Maximum sum assured is Rs 5 lakhs, which is based on sum under

consideration i.e. rated up sum assured during last two full years.

o The plans that are not allowed are - Whole life with profits, Jeevan Mitra (Triple
cover), Jeevan Bharati, Anmol Jeevan and Term rider.
o Maximum aggregate sum assured of Rs 2 lakhs under Table Nos. Jeevan Mitra
(Double Cover), Jeevan Saathi, New Janaraksha, Jeevan Chhaya, Jeevan
Surabhi-15, 20 and 25 years.
o

The proposer should be employed in Government or reputed commercial

firm or should be a professional such as Chartered Accountant, Cost Accountant,
Engineer, Architect, Management / computer consultant, Doctor, Lawyer, Teacher,
Insurance Agent, etc.

Non-medical scheme under Mail Order Business will be allowed only if agents
visit the present country of residence of the NRIs to complete all formalities.

MHR by agent should be in the prescribed format.

Non-medical scheme

The procedure of buying insurance for NRIs is similar to that of selling any
regular insurance policy. A copy of the passport is needed.

'Mail order business' Non-medical scheme is allowed only if the agent

visits the present country of residence of the NRI for completing the formalities.
The agent should complete the usual procedure for non-medical business. He
should either send the proposal papers including NRI Questionnaire, Special
Questionnaire and a copy of the passport by mail or hand over the papers
personally to the concerned Branch Office.

o
o

Medical scheme
On NRIs visit to India, similar procedure of selling insurance is followed. A
copy of the passport is needed.
For Mail Order Business, the procedure to be followed is given below
The format of special MHR is to be filled in by the agent when he
visits the country of residence of the NRI to complete the formalities. Chairmans
Club Member agents can complete formalities under proposals from NRIs during
their visit to countries of their present residence. It has now been decided to allow

other agents also to complete formalities under proposals from NRIs during their
visit to NRIs present countries of residence.

Special Questionnaire for Mail Order Business under Medical

Scheme-if the agent does not visit the country of residence of the NRI for
completing the formalities, a special questionnaire has to be filled in by either

The employer in the case of employed persons

Dean or Principal of educational institutes in the case of

students
Personal physician in the case of self-employed / business

people

Frequently asked questions

1. Your team is based in the city of Kolkata, India while I am located in another
city in another country. Should I purchase my insurance policy from you, or
someone located physically closer to me?
We have clients based all over India, as well as the world. With proper our use of
technology, you will not feel the difference in level of service whether you are
sitting next door, or half way around the world. Our entire team is always available
on mobile phones for immediate assistance.
2. Who is an NRI?
A Non-Resident Indian is a citizen of India (holding a valid passport of the
Government of India) temporarily residing in the country of his/ her present
residence. He/ she should not have applied or planning to apply in the near
future for acquiring citizenship of his/ her present country of residence or any
other country.
3.

Are Green card holders or foreign Nationals of Indian origin are treated as
NRI?
No, Green card holders and foreign Nationals of Indian origin are not treated as
NRIs for the purpose of allowing Insurance. They are treated as Foreigners and the
underwriting rules as those prescribed for foreigners will be applicable.

4.

When can NRIs be allowed to purchase life insurance from LIC?

NRIs can be allowed insurance policies

a) on their visit to India. All the formalities of proposal completion, medical examination
reports/Special reports and Moral hazard report are required to be completed
during their stay in India.

b) from their present country of residence through Mail Order Business. All the
formalities of proposal completion, obtaining medical & special reports etc are to be
completed in the present country of residence.
5.

In which currency can NRIs buy LIC policies?

NRIs are allowed to purchase insurance policies in Indian Rupees only.

6.

Which documents will be valid for Income Proof?

a) The copy of Income Tax Return filed in the country of residence, if the Sum Assured
exceeds Rs15 lakhs
b) If no Income Tax return is filed , then a copy of employment contract mentioning
Salary or a certificate from a C.A. regarding business / other income.
c) Personal Financial Questionnaire (PFQ) duly filled in and signed by the proposer
and counter signed by the official filling in the MHR can also be accepted as proof
of income upto a Sum Assured of Rs25 lakhs
7.

How is the premium under NRI policies paid?

The premium can be paid by any of the following manner

a) By cheques drawn on his/her Non-Resident (External) Account or Foreign Currency

(Non-Resident) Account with a Bank in India (or Joint Account provided the
policyholder is one of the account holders)
b) By cheques drawn on bank accounts held in India in their own names, either solely
or jointly with the resident member of their family i.e. father, mother, husband, wife,
children, brother or sister whether the accounts have been designated as nonresident or not
c) By cheques drawn on an account maintained by a resident parent or spouse of the
non-resident policyholder with a bank in India, held solely or jointly with their close
relatives. If the life assured is a bonafied student, premiums can be accepted if
paid in India, by somebody else on his behalf
d) By the absolute assignee in India wherever such policies have been assigned to a
resident in India
e) By the employers in respect of policies issued to their employees who have been
deputed abroad by them
f) Premiums can be paid in cash by a resident parent or spouse of the Non-Resident
policyholder subject to his/her submitting a letter statingthe relationship with the
policyholder

g) Premiums due on policies issued to Indian students who have gone abroad for
higher studies may be collected in Rupees out of the Resident Bank Account in
India or any of their representatives in India by cash or cheques
8.

How are the medical tests done?

a) On their visit to India. All the formalities of proposal completion,medical
examination reports/Special reports and Moral hazard report are required to be
completed during their stay in India
b) From their present country of residence through Mail Order Business. All the
formalities of proposal completion, obtaining medical and special reports etc. are to
be completed in the present country of residence.

9.

How are the claims settled?

The settlement of claims (in rupee) of life insurance policies in favour of claimants
residing outside India will be permitted in foreign currency only in proportion in which
the amount of premiums paid in foreign currency is in relation to the total premiums
payable.

10.

How are the claims settled for beneficiaries?

a) Non-resident beneficiaries of Insurance claims/maturity/surrender value settled in

foreign currency may be permitted to credit the same to NRE (Non-Resident
External)/ FCNR (Foreign Currency Non-Resident) Account if they so desire.
b) Claims/maturity proceeds/Surrender Value in respect of rupee life insurance
policies issued to non-resident Indians for which premiums have been collected in
non-repatriable rupees may be paid only in rupees by credit to NRO (Non-Resident
Ordinary) account of the beneficiary.This would apply in cases of death claims being
settled in favour of non-resident assignees.
c) Resident beneficiaries of Insurance claims/maturity/Surrender values settled in
foreign currency may be permitted to credit the same to RFC (Resident Foreign
Currency) Account if they so desire.

Claim procedure
How are the claims settled?
The settlement of claims (in rupee) of life insurance policies in favour of claimants
residing outside India will be permitted in foreign currency only in proportion in
which the amount of premiums paid in foreign currency is in relation to the total
premiums payable.
How are the claims settled for beneficiaries?

 For Non-Resident Beneficiaries:

Non-resident beneficiaries of Insurance claims/maturity/surrender value settled
in foreign currency may be permitted to credit the same to NRE (Non-Resident
External)/ FCNR (Foreign Currency Non-Resident) Account if they so desire.
Claims/maturity proceeds/Surrender Value in respect of rupee life insurance
policies issued to non-resident Indians for which premiums have been collected
in non-repatriable rupees may be paid only in rupees by credit to NRO (NonResident Ordinary) account of the beneficiary. This would apply in cases of
death claims being settled in favour of non-resident assignees.
For Resident Beneficiaries:
Resident beneficiaries of Insurance claims/maturity/Surrender values settled in
foreign currency may be permitted to credit the same to RFC (Resident Foreign
Currency) Account if they so desire
Which laws in India govern the investments done by NRIs in Life Insurance
Policies?
Life Insurance Policies bought by NRIs in India are governed by the regulations
issued by the Reserve Bank of India (RBI). These regulations are known as the
Life Insurance Manual.
Settlement of claims:
Claims of any nature arising under the policy will be settled in Indian currency in
India. The payment of policy monies in foreign currency can be made
proportionate to the premiums paid in foreign currency by direct Remittance or
from the Non Resident (External) Account or Foreign currency Non Resident
Account with a Bank in India.
Can Life Insurance policies be offered to NRIs? If yes, what is the maximum
insurance cover allowed to an NRI?
Yes, a life insurance policy can be offered to NRIs subject to filling up of an NRI
questionnaire and company's underwriting norms. There is no limit on the
applicable cover. It depends on the financial capacity and the medical condition of
the policyholder. No health riders are available to an NRI customer.

Can NRIs pay premium in foreign currency?

As per existing laws, NRI policyholders can pay premium in convertible foreign
exchange subject to exchange regulations as amended from time to time. There is
no restriction on paying premium in foreign currency provided the premium is paid
in an approved manner. For policies denominated in rupees issued to NRI, funds
held in NRO account can be accepted towards payment of premium

How can an NRI pay the premium under the policy?

NRIs can pay insurance premium through the following channels in INR only.
a. Remit directly from abroad through our global partners.
b. Debit from NRO, NRE or FCNR account
c. Credit Card
d. Electronic Clearance service
What is the claims payment procedure for an NRI policy?
You can claim the amount of your policy at the time of maturity. Or the claim would
be given to the nominee incase of an unfortunate demise.
a. Non Resident beneficiaries of insurance claims/maturity/surrender value settled
in foreign currency may be permitted to credit the same to NRE/FCNR account.

b. Resident beneficiaries of the insurance claim/maturity/surrender value settled in

foreign currency may be permitted to open and credit the proceeds thereof to their
RFC (Domestic) Account instead of RFC Account.

c. NRI policyholders who are beneficiaries of insurance claims/maturity or

surrender Svalue settled in foreign currency in respect of policies issued by Indian
Insurance Company may be permitted to credit the proceeds to the RFC Account
by them on their becoming residents.

d. Claims/maturity proceeds/surrender value in respect of rupee life insurance

policies issued to NRI for which premium have been collected in non-repartriable
rupee may be paid only in rupee by credit to NRO account of the beneficiary. This
would also apply in cases of death claims being settled in favour of non-resident
assignees/nominees.
E. Claim/maturity proceeds/surrender value in respect of rupee policies to foreign
nationals not permanently resident in India may be paid in rupees or may be
allowed to be remitted abroad, if the claimant so desires.

What are the tax implications on claims of an NRI policy?

Section

Benefits

80C

Premiums paid towards a life insurance policy

are eligible for a deduction of up to Rs 1 lakh
from the taxable income.

80D

Premiums paid towards health insurance are

eligible for a tax rebate of a maximum of Rs
15000 (Rs 20,000 for senior citizens) from the
taxable income.

10(10D)

Any benefits received on your life insurance

policy is tax free

10(10A)(iii)

With respect to insurance proceeds, one third

of the value at vesting Date would be tax free

a. Tax benefits / exemptions are applicable irrespective of the status of the NRIs
(NRIs/PIOs or OCIs).
b. Please take finance opinion
Can NRIs secure a policy under MWPA (Married Woman Property Act)?
Yes, it is possible to secure a policy under MWPA.
Can Persons of Indian origin (PIO) take an insurance policy?
Yes, a PIO can take an insurance policy as per guidelines of the company subject to
submission of proof of being a PIO
Can a NRI policyholder assign his policy?
Yes, a Non Resident policyholder can assign his policy to his Non Resident wife or
other dependants without the prior approval of the Reserve Bank of India, provided
there is no monetary consideration. However, the assignee will be entitled to the
same treatment as regards the proceeds as would be applicable in case of the NRI
policyholder.
Can a foreign national be a nominee?

A foreign national can be the nominee depending upon the "existence of the
insurable interest norms" or other nomination rules issued by various insurance
companies. However, the foreign national in his capacity as a nominee will be
entitled to same treatment as regards the proceeds as would be applicable in case
of the NRI policyholder. In case the NRI policyholder has paid for the premiums in
rupees, the foreign national would be entitled to proceeds in rupees only.
Can foreign nationals not permanently resident in India be issued an insurance
policy?
Foreign citizens, who are resident in India purely on account of their employment,
profession or business with a valid employment/business visa, are treated as
persons not permanently resident in India.
Policies denominated in rupees may be issued to foreign nationals not permanently
resident in India provided the premiums are paid out of foreign currency funds or out
of NRE/FCNR account of the insured or his family members held in India. and s/he
provides a copy of the passport, valid work permit, and employment contract clearly
stating the duration of the contract, which should be greater than the term of the
policy.
What documents are required for issuing an NRI policy?
The following documents are required from an NRI policyholder: Units in the funds
may not be offered or sold within the United States or to United States Persons,
except in a transaction not subject to, or pursuant to an exemption from, the
registration requirements of the Securities Act and any applicable state securities
laws and which would not require the funds to register under the Investment
Company Act. The term "United States Person" shall have the meaning ascribed to
such term in Regulations under the Securities Act. a. Duly completed proposal form.
b. Customer Information Report.
c. A copy of the passport.
d. NRI questionnaire duly completed
e. Copy of passport
f. Copy of valid work permit/ visa
g. Valid income proof depending upon the total actual sum assured along with
financial statement
h. Appointment letter/salary slip issued by the employer clearly stating the
policyholder's designation, tenure and salary details.
i. IT assessment orders, if the same is issued in the country of employment
j. Copy of the address proof ( if different from what is stated in the proposal form and
the passport)
k. Photograph to be pasted on the proposal form
l. Occupational or avocational questionnaire , if applicable

What documents are to be submitted for a proposal under Medical Business?

a. All the above referred requirements specified in the previous question along with
b. Medical tests as per the grid in avia empanelled centre in India
c. Proof of photo identity to be submitted at the time of medicals
d. Refrain from consuming alcohol a day prior to medicals
e. Fasting 12 hours prior to medicals where blood test is one of the requirements
f. Medical questionnaires if applicable

UNIT :- II

Nationalisation of life insurance

The reason for the nationalisation of the insurance industry are rather well known
and concerned mostly with the unethical practices adopted by some of the players
against the interest of the customers . Nationalisation had lent the industry solidity
,growth and reach which is un-parelled .Moreover ,along with these achievements
there also grew a feelings of insensitivity to the needs of the market ,traditions in
adoption of modern practices to upgrade technical skill coupled with a sense of
lethargy ,which probably led to a feeling amongst the public that the insurance was
not fully responsive to customer needs .
Nationalisation of life insurance business became necessary with a view to :
1.
2.
3.
4.
5.

Provide for cent percent security to policy holders.

Ensure the use of life insurance funds for nation building activities
Avoid wasteful efforts in competition
Save the dividends paid to shareholders of insurance companies
Avoid certain undesirable policies adopted by the management of some of the
insurance companies .
6. Spread the gospel of life insurance into the neglected rural areas.
The government of india took the first step towards nationalisation of life assurance
business in india on the 19th January ,1956 by promulgating an ordinance vesting
the management and control of life insurance business of 154 indians ,16 nonIndians insurer and 75 provident societies operating in the country . Moreover ,the
companies continued to exist wth the respective shareholders .on june 18 ,1956
they put a bill through the parliament which emerged as the life insurance
corporation act (XXXI of 1956 ) which was gazette the next day .It came into force in
july ,1956 .By this act all the assets and liabilities pertaining to the life insurance
business in india of all registered Indian insurers ,were to be transferred to and
vested in the life insurance corporation of india as from the appointed day .
according to this act a corporation called life insurance corporation of india (LIC )
was established which started its career on sep 1, 1956 .

Since nationalization ,life insurance business in india is conterminous with the state
owned LIC, which has a dominant position in the economy in two ways .First as a
national insurance agency it serves to pool and redistribute risk associated with the
death of insurers ( policy holders ) in millions of households. In many case ,the
insurance policies provide for saving for old age .Lfe insurance is thus important from
social point of view . Secondly as a major collective saving instituton, LIC is a
dominant financial intermediary in the economy ,channellising the investible funds to
the productive sectors . Thus ,insurance provides mean to mobilise house hold
savings on a large scale for rapid industrialisation and self reliance in heavy
industries for the development of the country and also counducting the business in
the spirit of trusteeship and providing protection to the people in every of the country