Those who are residents in India and get the benefits of their life insurance products usually do not come across a few situations. But when the event calling for raising a claim occurs outside India including death or critical illness, or when the insurance policy is bought from a company which is not registered in India, there needs to be a clear cut idea about what happens under such situations. Highlighting both the above scenarios, we will focus on them one by one.
How does a life insurance policy work in case the death occurs outside India?
The term insurance is valid outside India even if the Indian citizen is away from India for a year or two subject to terms and conditions. If the insured dies outside India during the policy tenure,the nominee receives the death benefit compensation. But the destination of death surely matters, if not always, in a few cases for sure. There are some insurance companies that require that a policy is in effect for at least two years to make a claim. The beneficiary will be required to submit the proof of the policyholder’s death and also file a foreign death claim. Again, the procedure to get the death reported will differ from country to country.
The proof is required to avoid fraudulent claims. The beneficiaries should contact the embassy of the country where the death of the policyholder took place. There could also be a need to take help of an attorney who can help you in lodging foriegn death claims. Suspicious death, suidcide by the policyholder, death in a county which is considered unsafe for travellers, death due to war, engaging in risky activities etc. will result in rejection of claims.
Those who frequently travel should notify their insurance company if they are going to be out of the country for a long time. In case of indemnity policies there is an additional requirement, ascertainment of the loss that has been incurred. The insurance company has the resources and a system to arrive at the expenses or loss suffered by the policyholder in India.
To ascertain losses that take place in a similar situation outside India is not very easy.The health insurance policies usually cover the expenses incurred in India only. However, there are exceptions everywhere and the same applies to insurance policies as well. Overseas travel policies enable an insurer to arrive at the exact amount of expenses incurred in a foreign country. And there are indemnity policies too that are made for each country.
Life Insurance Policies by Insurance companies not registered in India
Indian residents can use their Liberalised Remittance Scheme entitlement of upto USD 2,50,000 per annum to buy life insurance policies of foreign companies. As these policies are denominated in foreign currencies, the insured use them as investment cum insurance policies for their goals such as children’s education denominated in foreign exchange.
Note that the rules and regulations that govern these policies are not known. Hence, the grievance redressal mechanism is also not known in case the claim is rejected. The countries where these policies are issued will govern them, so one needs to be careful while buying such products.
Evaluate the cover that it provides and it should be done just like in case of any other investment cum insurance cover. If you find it sustainable then go for it. Also check the risk part associated with the investment portion. You can compare them with similar foreign exchange denominated investment instruments available under the Liberalised remittance scheme.
The RBI does not permit residents to take a life insurance policy from an overseas insurer without prior approval. The only exception being when it was taken by a resident Indian while he/she was resident outside India. The remittance of premium is allowed by the RBI for continuing the policy, on a condition that the maturity proceeds be brought back into India within seven days.
International Health Insurance
Those who are planning to live overseas for extended periods can invest in high-quality international health insurance plans to cover the medical costs. For most countries, insurance plans may also be a requirement to get a visa to show you have sufficient health coverage. Such insurance plans are advisable for expatriates, digital nomads and international citizens who visit other countries more often. Such a cover gives you protection wherever you are in the world including your home country. And it includes in-patient, out-patient, dental and vision treatment, other wellness etc.You can choose the hospital or doctor for your medical evaluation and treatment by having international health insurance. Emergency evacuation and repatriation is possible. The insured also gets the choice of multiple currencies for payment. The additional benefits can be added as per the policyholder’s preference.
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Bhoi Smrutirekha Dharanidhar