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Archive / Investment Adviser (Level 2) / Non-Life Insurance Products
nism-series-xb-health-insurance-strategy-returning-nri[ INVESTMENT ADVISER (LEVEL 2) ]

Mr. & Mrs. Gupta's US health insurance provides worldwide coverage (including India) but costs are high. Why is it strongly recommended that they purchase a comprehensive health insurance policy in India upon their return?

[ A ]Foreign health insurance policies are illegal to use in Indian private hospitals
[ B ]Indian health insurance premiums are mandatory under the Companies Act for all start-up founders
[ C ]Indian health policies are cost-effective and taking a policy immediately helps serve statutory waiting periods for pre-existing diseases and accumulate Cumulative No-Claim Bonuses in India[ CORRECT ]
[ D ]US health insurance companies charge a 50% penalty on claims submitted from Asian countries
Takeaway

Buying an Indian health policy immediately lets the Guptas start serving pre-existing-disease waiting periods and building cumulative no-claim bonuses at Indian pricing, so option C is correct.

Derivation
Indian health insurers typically impose a statutory waiting period (often 3-4 years) before pre-existing conditions are covered, and offer cumulative bonus increments for each claim-free year. Buying a policy immediately on return starts this clock running as early as possible, rather than leaving the family exposed while continuing to rely on an expensive out-of-pocket foreign policy for Indian treatment. Indian premiums are also substantially cheaper than servicing a US-linked global plan out of pocket. This question tests the practical planning logic of front-loading the purchase of domestic cover — not a legal requirement, but a cost and waiting-period optimisation that returning NRIs commonly overlook.
Why the others fail
A — Foreign health insurance policies are illegal to use in Indian private hospitals
Indian private hospitals routinely accept and process reimbursement or cashless claims from foreign health insurers; there is no legal bar on using them.
B — Indian health insurance premiums are mandatory under the Companies Act for all start-up founders
Purchasing personal health insurance is an individual risk-management decision, not a statutory requirement under the Companies Act for founders or anyone else.
D — US health insurance companies charge a 50% penalty on claims submitted from Asian countries
US global health insurers process international claims per their own contract terms and do not impose an arbitrary flat 50% regional claims penalty.