My good friend Rakesh recently moved to Dubai after getting a job there. While he is not planning to come back soon, he is unsure if he should be buying a health insurance policy in India or in UAE. Rakesh and many other NRIs migrate every year to foreign countries and often face this conundrum.
Here are some of the guidelines that could help them arrive at a decision:
1. Duration of stay
How long are you planning to stay abroad? If it is for a short duration of three to four years, then it makes sense to buy a health policy in both countries. It will take care of the hospitalization and related expenses regardless of where you are hospitalized.
If you already have an Indian cover, continue paying its premium till you are back. Usually, there is a waiting period of 2-4 years before, existing and other standard illnesses are covered in Indian policies. By continuing with the existing policy, you will not only keep premiums lower but also be able to make claims (if any) immediately after you return.
However, if you have a long-term plan to stay abroad, avoid taking health cover in India that will only unnecessarily drain your resources. Just buy a policy in the place of your residence.
2. Family residence
Is your family moving along with you? If your parents or children are staying back, continue with the family floater health policy even though you might have moved out of the country. It will indemnify you in case of hospitalization expenses incurred for your family members.
3. Geographical coverage
Most of the Indian health insurers only reimburse hospitalization expenses incurred in India. So, if you are staying in Singapore and get hospitalized there for illness, Indian health policies wouldn’t cover it. While some Indian policies claim to provide global cover, you need to do the necessary due diligence by checking for possible caps on sum assured or exclusions.
For instance, one policy excludes hospitalization expenses incurred in the US, while being applicable only on select illnesses (cancer, organ transplant etc) and without covering its pre and post-hospitalization expenses. In general, Indian insurers have a different take on NRIs from a risk perspective, since their claims are difficult to verify in a foreign land.
Moreover, FEMA regulations mandate that the claim amount to be repatriated should be to the extent of the total premium paid in foreign currency. So, go through the policy wordings carefully before signing up for a global health cover.
4. Tax Benefits
NRI often earn in the form of rental income, dividend or interest income in India. They can seek deductions from such income under Sec 80 D of the Income Tax Act by contributing towards the local medical insurance premium. Deductions up to Rs 25,000 can be claimed every year for health cover of self, spouse and children and another Rs 25,000 for their parents up to 60 years of age. If parents are above 60 years, then NRIs can claim up to Rs 75,000 of deduction in a financial year on the premiums paid.
Points to consider while buying a health cover
It is not just about comparing premiums. While buying health cover, NRI should also look at the following factors:
Lifetime renewal: This is important especially if you are taking a policy for senior citizens. It will ensure any claim doesn’t result in the cancellation of the policy. Given the escalating medical costs, ensure your policy has this feature.
Claim settlement: Higher the claim settlement ratio of the insurer, the better it is as it indicates that the insurer is honouring its commitment towards its customers.
Network hospitals: It’s not just about the number of hospitals, but whether they have sufficient hospitals in your vicinity. Also, glance through the list of hospitals to see if it includes the reputed and those of your choice.
Sub-limits and exclusions: Skim through the policy documents for any exclusions or sub-limits. For instance, hospital expenses could be capped to a certain percentage of sum assured or some diseases excluded. Bone diseases, cervical cancer and alternative therapies such as acupressure, naturopathy or acupuncture are also not usually covered in the health policy.
If you are going abroad on a long stint with your family (like Rakesh), a health policy in India will be an unnecessary drain on your resources. However, if you are coming back in 3-4 years, continue with your health plan to keep the premiums lower and make immediate claims.