NRIs in UAE: How to choose the right life insurance policy in India

Delhi - Get your questions answered.

Question: With a lot of young people being out of work, startups have got a boost with more enterprises being set up. However, marketing of products is going to be an obstacle in the initial stages. Would the Indian government be prepared to support startups by ensuring that public sector enterprises and government companies give preference to products manufactured by these startups?

Answer: The government has set up a Public Procurement portal called Government e-Market (GeM). The Ministry of Commerce has now exhorted all startups to register on GeM. Once this is done, their products can be listed and goods and services can be offered to public sector units, government organisations, state government bodies and hospitals, schools and colleges run by the government.

It has also been announced that there is huge potential for startups in supplying to railways and for airport services. Startups are also being given special encouragement for going into food processing, health care and allied agricultural services. More than 4,000 existing startups have already been registered on GeM.

Further, the Department for Promotion of Industry and Internal Trade has set up national awards to recognise and reward outstanding startups and ecosystem enablers that have high potential for employment generation.

Question: Different companies are issuing life insurance policies which have different clauses. This makes it difficult for persons who are not well versed with insurance to decide and choose the right policy. Is there any guidance in this regard?

Answer: Starting from early 2021, all life insurance companies in India were to be standardised and will have to mandatorily offer a policy that is designed as a non-linked, non-par protection policy. This will be available for those in the age group of 18 to 65. The tenure of the policy will be from five to 40 years. It will be payable at the time of maturity for which the maximum age is fixed at 70.

The Insurance Regulatory and Development Authority has come up with these insurance standards to help persons who cannot devote adequate time and energy to make informed decisions to select the right product. According to the regulator, such standardised product will reduce misselling and avoid disputes at the time of settlement of claims. This is primarily meant to help the weaker sections of society to purchase a life cover. In case of death, the lump sum insured amount will go to the nominee of the person insured.

Question: My non-resident friends and I would like to set up a private equity fund. However, we have been told that we need the qualifications of chartered accountancy/masters in business management. We are engineers and non-finance senior executives working in the Gulf. Would we be disqualified from setting up a fund in India?

Answer: So far, the Securities and Exchange Board of India has stipulated that an alternative investment fund — which is the regulatory term for private equity, venture capital or angel funds — should have at least one key person who should either be a chartered accountant or a holder of an MBA (finance) degree. However, this regulation has now been changed and more flexibility is provided. Persons with other academic qualifications will also be permitted to set up alternative investment funds.

Those with adequate experience in other fields, like engineering, may also be permitted to be promoters of a new fund. However, one of the key personnel will have to be a qualified chartered accountant or have a masters degree in finance. An alternative investment fund registered with Sebi is permitted to accept investments from foreign individuals as well as overseas investment entities.

(H.P. Ranina is a practising lawyer, specialising in tax and exchange management laws of India.)

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