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Understanding NRI Life Insurance Claim Process

TeamAckoNov 2, 2023

Life insurance can be complex for Non-Resident Indians (NRIs) living abroad. This guide aims to simplify the NRI life insurance claim process with a step-by-step overview of essential documentation and settlement procedures. You'll also learn about policy types, tax implications, and benefits for NRIs. Read on for valuable information to help streamline your journey toward financial security.

Contents

Understanding NRI Life Insurance Claim Process
Overview of Life Insurance claims
- Types of Life Insurance Policies For NRIs
Documentation for NRI Life Insurance claim
Claim settlement process for NRIs
Tax Implications On Life Insurance Claims For NRIs In India
Life Insurance benefits offered to non-resident indians
Frequently Asked Questions

Understanding NRI Life Insurance Claim Process

NRI means an Indian-born person with an Indian passport living abroad for an extended period. The determining factor is the number of days spent outside India in a financial year. NRI differs from PIO (Person of Indian Origin), a foreign national with Indian ancestry and no Indian passport. Example: Rajesh, an Indian citizen living in the US with an Indian passport, is NRI. Sarah, born and raised in London with Indian ancestry, is a PIO with UK citizenship.

Overview of Life Insurance claims

An NRI must know how to process the life insurance claims of different insurance companies. With Acko Insurance, you get a smooth process of claiming insurance and faster approvals via an easy claim process.NRIs can buy different insurance plans like Term plans, Endowment plans, and Money-back policies, which cater to their specific needs and provide flexibility and affordability — alongside financial stability in challenging times.

Types of Life Insurance Policies For NRIs

NRI life insurance options in India include the following types.

NRIs can choose Term Insurance plans, which offer coverage for a specific term, ranging from 10 to 30 years.
Endowment policies combine life insurance and savings, where the policyholder receives maturity proceeds at the end of the term.
Unit Linked Insurance Plans (ULIPs) offer investment and insurance components, allowing policyholders to invest in various funds.
Whole-life policies offer lifetime coverage and may have a monetary value that can be borrowed against or withdrawn.
Pension plans help build a retirement corpus with regular investments and provide annuity payments after retirement.

Choose wisely based on financial needs, investment goals, and risk appetite, as each policy has advantages and disadvantages.

Documentation for NRI Life Insurance claim

Here are the documents that may be required to file a claim.

Death certificate or cause of death certificate

Unnatural deaths may require post-mortem reports and FIR. Keep all documents handy during the claims process.

Original Policy Document

NRI life insurance claims require the original policy document, cause of death, and a death certificate copy to validate the contract between the insurer and insured. These documents also determine exclusions or circumstances of payment.Residents of India making death claims must also provide these documents. It is crucial to keep the documents safe and accessible to speed up investigations and benefit disbursements.

Proof of identity and address of the deceased person

To claim NRI life insurance, you need ID and address proof of the deceased and beneficiary. ID proof includes an Aadhaar card, passport, or driver's licence. All documents should be accurate and up-to-date to avoid delays or rejection of claims.

Decree absolute (in case claim is made by spouse)

Here are some points to remember. Spouses making an NRI life insurance claim may require a Decree Absolute document, which officially ends the marriage and proves legal rights to claim. NRIs need to be aware of Indian laws regarding who can receive benefits from their life insurance policy after a divorce. Consult with a financial advisor/lawyer to protect assets and ensure funds go where intended. Keep documents up-to-date and accessible for unexpected events like illness or untimely death.

Succession certificate (if legal heir makes a claim)

NRIs must apply to court and provide relevant documents such as birth, marriage, and death certificates to prove their claim. Although getting a succession certificate is time-consuming and requires legal help, the beneficiaries can receive any benefits under the policyholder's name once obtained.

Claim settlement process for NRIs

Consider tax implications, benefits, and other factors before you select an insurance policy from an Indian company.

1. Intimation of death to the insurance company

Be aware of specific timelines for intimation and documents required by the insurer, such as a medical certificate or police report. Keep yourself familiar with policy terms and conditions to avoid complications, ensuring smoother claims.

2. Submission of necessary documents and forms

The following documents may be required to file a claim.

Claim form: A completed and signed form submitted to the insurer.
Original policy document: The original and a photocopy. If lost, an indemnity bond is needed.
Death certificate: An original or attested certificate from a local authority.
Medical certificates: Submit copies of hospital records and medical certificates (if applicable), showing treatment given before death.
Employer certificate (if applicable): For accidental death cases, submit a copy of the FIR lodged with the police station and the employer's certificate stating no negligence by the employee.
Postmortem report (if applicable): Submit a postmortem report in case of sudden or accidental deaths.
Address and identity proof: Provide current address proof and valid ID proof such as passport, driving licence, or PAN card copy.
GST exemption form (if applicable): Relevant documents to get a refund for taxes paid in India.
Questionnaire (if applicable): Additional questionnaires to be filled out by nominees/beneficiaries providing necessary information.

3. Claim investigation by the insurer

The process can take up to three months, and additional documents may be requested for clarification.

4. Approval and disbursement of the claim amount

Here are key points to remember.

Claim amount: The insurance company disburses the claim amount to the nominee/beneficiary within a stipulated time frame, in Rupees or foreign currency as per policy terms.
Deductions: The insurer may deduct charges such as service tax, CESS, or any outstanding dues the policyholder owes at death.
Multiple nominees: With multiple nominees, the claim amount will be divided based on their respective shares as per the policy document.
Verification: If discrepancies or inconsistencies are found, the insurer may request additional documents/information from the nominee or beneficiary.
Payment options: The insurer may offer lump-sum payment, instalments, or annuity payout based on policy terms and conditions.

Remember, timely submission of required documents and accurate information can help expedite the NRI life insurance claim settlement process.

Tax Implications On Life Insurance Claims For NRIs In India

NRIs can claim tax benefits on their investment in life insurance policies in India. Still, checking tax provisions at each stage of the policy life cycle is crucial. Life Insurance Death Benefit and maturity proceeds are exempt from taxation for Indian citizens, regardless of their country of residence. Life insurance provides a good source of income and security for the financial future of family members. NRIs can claim tax benefits on life insurance premiums under Section 80C of the Income Tax Act, up to Rs.1.5 lakh per annum. Death benefits beneficiaries receive are also tax-free under Section 10(10D).ULIPs offer market-linked returns and tax benefits to NRIs in India. However, NRIs should check tax provisions for term insurance covers in other countries before investing. It is recommended that NRIs consult financial advisors and review policy terms and payment options before investing in any insurance plan.

Note: Tax benefits are applicable under the old tax regime.

Life Insurance benefits offered to non-resident indians

Here is a list of benefits offered under life insurance policies to NRIs.

Maturity Benefits: Endowment or money-back plans provide a sum assured (plus bonuses) at maturity, serving as a long-term savings vehicle for financial goals.
Flexibility in Payment Options: Most insurers offer flexible payment options for premiums, making it helpful for individuals without regular income streams.
Guaranteed Returns: Traditional life insurance policies with guaranteed returns provide a secure way to grow wealth without risk.
Continuation of Cover: NRIs can continue paying premiums and renewing their Indian life insurance policies even after moving abroad.
Multiple Currency Options: Some insurers offer policies where premium payments can be made in foreign currencies, eliminating the need for conversion rates or remitting money back to India.
Life Stage Planning Riders: Critical illness cover or accidental death benefit riders provide additional coverage during specific stages in one's life.

Investing in Indian life insurance policies while residing abroad is brilliant, as policies often come with attractive features tailored for NRIs.

Frequently Asked Questions

Here are some common questions about the NRI Life Insurance claim process.

What is NRI life insurance?

NRI life insurance is a type of life insurance policy designed for non-resident Indians (NRIs) who want to protect their families financially in case of their untimely death.

How long does it take to process an NRI life insurance claim?

According to the Insurance Regulation and Development Authority of India (IRDAI), for death claims, if an investigation is not required, the claim should be settled or rejected within 30 days of receipt of the last necessary document. If an investigation is required, it should be completed within 90 days of receipt of claim intimation and the claim should be settled within 30 days thereafter.

Can an NRI claim life insurance in India?

Yes, NRIs can claim life insurance in India. However, they need to ensure that they have a valid policy and all the required documents to file a claim. It is also important to note that the claim process may take longer for NRIs compared to residents of India.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.