Everything You Need to Know About Health Insurance for NRIs

NRIs or Non-Resident Indians are Indian-born citizens who have emigrated to a foreign country. Even though they may reside in another country, NRIs can carry out several financial and legal transactions in India, including buying a health insurance policy. Whether you are an NRI or a resident Indian, you should be financially prepared for unexpected situations. A health insurance policy can help in this regard. It can provide financial support when you or your loved ones are in a medical emergency. While the benefits of health insurance make it a worthy purchase, it is important to choose the right product so that you can make the most of it. We help you in this regard. But first, let’s get the basics of health insurance for NRIs right.

Can NRIs Buy Health Insurance in India?

Yes, Non-Resident Indians (NRIs) can buy health insurance in India for themselves and their families. To do so, they need to provide certain documents, such as proof of Indian citizenship (e.g., valid address proof, recent Income Tax Returns). Persons of Indian Origin (PIOs) are required to submit their passports when purchasing health insurance in India. It’s highly recommended for NRIs planning to return to India permanently within 3-4 years to buy an Indian health insurance policy. This ensures that by the time they relocate, the waiting periods in their policy will be over, and they can raise claims immediately upon their return. It also eliminates the need to rush into purchasing a policy once back in India.

What Are the FEMA Regulations for NRIs?

The Foreign Exchange Management Act (FEMA) governs the issuance of health insurance policies for NRIs in India. According to FEMA guidelines, the claim amount for an NRI health insurance policy can be up to the total premium paid by the NRI in foreign currency. Additionally, claims can be paid into the NRI’s foreign bank account or a Resident Foreign Currency (RFC) account, which is maintained with an authorized bank in India.

Why NRIs Should Buy Health Insurance in India?

Here are some key reasons why NRIs should consider purchasing health insurance in India:

1. Medical Coverage in India

If an NRI has health insurance in their country of residence (e.g., the UK), it typically won’t cover medical expenses in India, as most foreign policies have geographical restrictions. By purchasing an NRI-specific health insurance policy for use in India, you can cover medical expenses incurred during visits.

2. Ensure Adequate Coverage

Certain health issues like stomach ailments and flu are more common for NRIs visiting India. A health insurance policy purchased abroad may not cover these specific conditions while in India. However, an NRI health insurance policy in India ensures these expenses are fully covered.

3. Continued Coverage

If you travel to India frequently, buying health insurance specifically for NRIs is a smart choice. This ensures that you have continuous medical coverage during your visits to India, saving you from the hassle of buying new insurance every time you travel.

4. Affordable Premiums

Health insurance premiums in India are generally much lower compared to other countries. This is because healthcare costs in India are far more affordable, which makes Indian health insurance plans a cost-effective option for NRIs.

5. Hassle-free Claim Settlement

Filing claims with Indian-based insurers is typically smoother and more efficient than dealing with foreign insurers. With an Indian health insurance policy, you can easily access cashless treatment facilities, especially when visiting India. Foreign insurance policies may involve a more complicated and time-consuming claims process.

6. Advantage on Waiting Periods

Many health insurance policies in India have waiting periods, especially for pre-existing conditions, which can range from 2 to 4 years. If NRIs buy an Indian health insurance policy in advance, they can complete the waiting period before relocating to India, ensuring coverage as soon as they move back.

7. GST Refund on Premiums

In India, health insurance premiums include an 18% Goods and Services Tax (GST). NRIs who pay taxes in their country of residence are eligible to claim a refund on the GST paid on their health insurance premiums in India. To qualify for the refund, you must be listed as one of the insured members, pay the premium from an NRE account, and submit the necessary documents such as a declaration, Tax Residency Certificate (TRC), and a 6-month statement from the NRE account to the insurer.

How Does Health Insurance Work for NRIs?

The basic principles of health insurance remain the same for NRIs and residents. The policyholder buys a policy and pays the premiums regularly and in return for the same, they receive coverage against hospitalisation and other medical events. However, certain aspects of the policy may be different for an NRI. Some insurance companies may only allow NRIs to purchase a plan when they have come to India. With other insurers, you may be able to buy an online health insurance plan from your resident country. Regardless, essential documents regarding your Indian citizenship, passport, bank account, and so on, will be required. Premium payments and other financial transactions for health insurance would have to be carried out via Indian currency only.

Points to Consider When Buying Health Insurance as an NRI

Now that you may know what is health insurance like for NRIs, let’s see the points you should keep in mind when buying health insurance as an NRI.

Health insurance coverage has geographical limitations

Every health insurance policy will have a geographical limit on its coverage, i.e., beyond that limit, the health coverage will not be valid. In most cases, a health insurance policy bought in India may not cover medical expenses in other countries, such as the USA, the UK, Canada, Singapore, and so on. The countries covered under the health insurance plan depend on the insurer. It is also to be noted that medical expenditure can go very high in developed countries. If exchanged in Indian currency, it can exhaust the sum insured of your health insurance plan soon. This can also be another reason why health insurance bought in India is not valid when one goes abroad.

Certain kinds of treatment may be covered

In some cases, a health insurance policy can cover expenses for medical treatments and practices carried out abroad. This is more likely to be the case for ailments which require medical infrastructure or resources that can only be availed abroad. * It is best to discuss this with the insurance company when you are buying the health insurance plan.

Coverage is valid for resident members of the family

Even if you cannot access the benefits of health insurance while abroad, if you have family residing in India, they may be able to get coverage under it if they are covered. That is why, if you are planning to move out of India soon and buying health insurance is on your mind, it is advisable to opt for a family health insurance plan. In a family plan, along with the main policyholder, multiple members of a family can be covered, including your parents, spouse, dependent children, siblings, and so on. *

The waiting period can be completed while abroad 

If you are planning to go to another country and return to India within a few years' time, then buying health insurance can be beneficial as well. You can buy it before you leave and while you are there, the waiting period, which usually lasts for about 1-2 years, can get complete. * This way, by the time you return to India, you would have active health insurance coverage you can benefit from.

Health insurance tax benefits are similar for NRIs

If you are filing your tax returns in India as an NRI, you can claim tax benefits against your health insurance plan under the old tax regime. As per Section 80D of the Income Tax Act, 1961, the premiums of a health insurance policy can be used to claim tax deductions up to Rs 25,000. This is applicable to individuals under 60 years of age. If the person being insured is over 60 years of age, the tax deduction can extend to Rs 50,000. ** Thus, buying health insurance as an NRI can have benefits as well as some limitations. Regardless, one should remember that health insurance is a non-negotiable part of living a financially healthy life. Ensure to read the terms and conditions of the health insurance policy before signing. * Standard T&C apply. ** Tax benefits are subject to change in prevalent tax laws. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.