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HindustanTimes Sat,23 Aug 2014

Moving abroad? Review your insurance policies

Deepti Bhaskaran , Hindustan Times  New Delhi, August 02, 2013
First Published: 21:06 IST(2/8/2013) | Last Updated: 21:16 IST(2/8/2013)

Are you moving out of India or are already a part of the Indian diaspora? If you’ve recently moved, chances are that you are still funding some insurance policies bought earlier. If your answer is yes, it’s time to review your insurance policies. Whether you should keep your policies alive or discontinue will depend mostly on the duration of your stay abroad.

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Read on to know what you should do with your life and health insurance policies if you are living abroad or are in the process of relocating abroad.

Life insurance

If you have a term plan — a pure insurance product that only charges you for insurance and does not invest any money — then what you do with it will depend largely on two things: your stay abroad and your age.

Keep in mind that you buy insurance for your dependants. So ensure that in case your dependants need to make a claim, they are able to interact with the insurer easily.

“Ideally, if you are living abroad only for a short period of time and have family in India it makes sense to stick with your policy in India. But if you plan to relocate with your family for good then you should consider buying a fresh term plan abroad as term plans are much cheaper there,” says Suresh Sadagopan, a Mumbai-based financial planner.

Your age and health are also important parameters. If you bought your plan when you were young, you would be paying a much lower premium. So factor that in as well.

“There is always the question of medical underwriting. For non-resident Indians (NRIs) who are older and not medically fit, we recommend sticking to their term policies. But individuals needs to be sure of whether they are relocating for good or only for some time before making a decision,” said Sadagopan.

But if you have a savings-cum-insurance plan such as unit-linked insurance plans (Ulips) or traditional investment products, you need to look at the costs involved. “In case of a Ulip, you need to look at the fund’s performance and costs. In traditional plans, there is a surrender charge so we need to see the overall portfolio.

For instance, many customers have numerous small-ticket size policies, which are difficult to administer or may be paying a huge premium which leaves very little money to target different goals. In such cases, we recommend discontinuing a few policies,” said Sadagopan.

Sit with a financial planner and understand the returns and costs of the policy before making a decision.

Health insurance

A basic health insurance policy that pays for hospitalisation can usually be claimed for hospitalisation that takes place only in India. So you have no choice but to buy another health insurance abroad. Plus, most countries will insist on one. Buying a health insurance abroad would make this policy from India redundant, but should you discard it? Generally speaking, yes, but if you are abroad for a short stint then it may make sense to keep it.

“For NRIs who make frequent trips to India or are looking to come back after a few years, a good alternative is top-up plans. This way they can make small-ticket expenses from their pocket and bank on health insurance for big- ticket expenses,” said Sanjay Datta, head-underwriting, ICICI Lombard General Insurance Co. Ltd.

A top-up health insurance plan, also called add-on plan, is a regular indemnity policy that covers hospitalisation costs but comes with a heavy deductible. A deductible is that portion of the claim amount that is to be paid by the insured person first before the benefits of the insurance policy can kick in.

So a deductible of Rs. 1 lakh in a top-up policy means that expenses up to R1 lakh will have to be borne by the insured himself. But if the bill is above Rs. 1 lakh, the top-up policy will pay the balance, up to the sum insured chosen. These policies are cheaper than regular health insurance plans.

“The other alternative is to buy a global health insurance policy that can be claimed anywhere in the world. However, such policies are expensive and should be considered only in case of frequent relocations,” said Datta.

A defined benefit policy such as a critical illness plan, which pays a lump sum, can be claimed even if you are living abroad.

If you are moving abroad or are already living abroad, it’s important to review the policies bought in India to make the most of your finances.


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