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Many NRIs have been confused about whether to buy health insurance in India or the UAE. Are there tax benefits to buying insurance plans in India? Image Credit: Shutterstock

Dubai: Many NRIs have been confused about whether to buy health insurance in India or the UAE. There are many NRIs who migrate abroad and often face this dilemma. As an NRI, there are several factors you need to consider on whether you should buy health insurance in India.

Health insurance premiums in India are considerably lower than what you would pay in other countries. That is because the cost of medical treatment in many developed countries, especially the US, is simply too high.

In stark comparison to most other developed countries, the health insurance premium rates in India are very low and a family of four can get a cover of INR2 million (Dh98,967) for about INR70,000 (Dh3,463) to INR80,000 (Dh3,958) per year.

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Is the coverage of Indian plans limited?

However, most Indian health insurers only reimburse hospitalisation expenses incurred in India. For instance, if you are staying in Dubai and get hospitalised, your Indian health policy typically would not cover it.

Some insurers do offer health policies with global cover, but not all global covers are designed the same. For instance, some only provide global health coverage in case of emergencies. Others only provide it in case of planned hospitalisation.

In the latter case, you would need to take an Indian resident doctor’s approval as well. There could be other restrictions and exclusions, and health policies with global covers are also expensive.

Some premium policies do cover life-threatening emergencies if they occur in a foreign country, but even they require a very high co-payment by the insured person.

There are also policies that cover medical expenses incurred abroad if that treatment and the required medical infrastructure do not exist in India.

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Do Indian plans being low cost mean you should buy it?

However, the low premium rates do not mean NRIs must always buy health insurance in India, multiple experts reiterate.

A health plan bought in India is meant to cover expenses on medical treatment in India. Almost all health insurance policies have geographical restrictions, which mandates that expenses incurred outside India will not be covered.

This clause on geographical restrictions is buried in the fine print of the terms and conditions so you may not notice it when you apply for a policy.

But it will render the policy useless if you are not in India. This is also why Indians going for studies abroad are encouraged to not rely on the health insurance plans bought in India but buy a policy in the destination country.

Who are excluded in buying Indian health care plans?

It’s been repeatedly made aware that NRIs from ‘FATF’ blacklist/call-for-action countries are excluded from the coverage and cannot apply. FATF stands for Financial Action Task Force, a group of countries that works together to combat money laundering and terror financing. 

Most health insurance policies have a clause that the policyholder should have to be an Indian resident to be able to claim outside India, so one should not spend more than six months outside India in a calendar year.

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However, if you are going abroad alone and your parents and/or children are staying back in India, then you can continue with the ‘family floater’ policy. (The policy will insure medical expenses in case your family members get hospitalised.)

Are there tax benefits to opting for an Indian plan?

When it comes to claiming tax benefits, an NRI can do so if he or she already pays taxes on income earned in India.

An individual (resident or non-resident) can claim a deduction of up to INR25,000 (Dh1,237) for premiums paid for health insurance for self, spouse and dependent children, including up to INR5,000 (Dh247.42) for preventive health check-ups, under Section 80D of the Indian Income Tax Act.

However, if the individual is a senior citizen (above 60 years of age), then he or she can claim a deduction of up to INR50,000 (Dh2,474.20) for premiums paid for health insurance for self, spouse and dependent children.

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Verdict: Should you buy health insurance in India?

Buying health insurance in India makes sense if the NRI is returning to the home country or intends to do so in a couple of years.

It’s advisable to buy the insurance well in advance because most policies have a cooling period of 1-2 months before some illnesses are covered. That way you will not have to rush to buy health insurance immediately after landing in India.

If the NRI family has a history of diabetes or a heart condition or there is a new born baby in the family, it might be cost effective to buy the insurance much before you intend to come to India. Certain pre-existing ailments such as diabetes and cardiac ailments are not covered by insurance for the first four years.

For certain other ailments, such as ENT disorders, hernia and osteoporosis, the waiting period can be 1-2 years. There is also a 90-day waiting period for infants. So even though you will have to shell out a premium for 2-4 years without enjoying any benefit, it still works out cheaper than not buying insurance.

So, the duration of stay is one of the important factors you will have to consider. If you are planning to stay overseas for a shorter duration, around three-four years, then it would be advantageous for you to buy a health policy in both countries.

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Do not stop paying premiums for your Indian health policy. This way you can keep premiums lower and make claims, if needed, as soon as you return without having to go through a waiting period for pre-existing diseases (PEDs).

On the other hand, if you have a long-term plan to stay abroad, then you don’t need to take health insurance in India. You are better off buying a policy in the country of your residence. For short trips to India, travel insurance is a cheaper way to get insured, experts explain.

It also makes eminent sense to buy medical insurance while traveling to India for holiday or business. It might just be a 5-6 day trip, but don’t travel without medical insurance. General insurance companies now offer customised plans that can fit your pocket.

For less than INR1,600 (Dh79.17) one can buy a cover for INR1.5 million (Dh74,225.88) to INR2 million (Dh98,967.84). Do watch out for a co-payment clause when you buy such a plan.