Foreign Employment Term Life Insurance for Nepali Migrant Workers

Foreign employment is one of Nepal's largest sources of household income, with hundreds of thousands of new labour permits issued every year and a member of a very large share of Nepali households working abroad. Because migrant work carries real risks of death, disabling injury and illness, Nepali law makes life and accident insurance compulsory for outbound workers so that a family is not left destitute if the worker dies. The requirement is anchored in the Foreign Employment Act, 2064 (2007 AD) and the Foreign Employment Rules, 2064, administered by the Department of Foreign Employment (DoFE) under the Ministry of Labour, Employment and Social Security.

In practice, a worker cannot obtain the labour permit (shram swikriti) needed to leave legally unless a valid foreign employment term life insurance policy is in place. The policy must be bought from a life insurance company licensed by the Nepal Insurance Authority (NIA, the successor to the former Beema Samiti) and recognised by DoFE. The rule applies whether the worker goes through a licensed recruitment agency or on an individual/permit-free (self-arranged) basis.

The policy is a pure term life and personal-accident product tied to the employment period. It has no savings or maturity value: if the worker returns safely, nothing is paid back. Its sole purpose is to deliver a lump sum to the worker's nominee if the worker dies, and to pay disability and medical benefits if the worker is injured, during the covered period abroad.

The core benefit is a fixed sum assured that is paid in full to the named nominee if the insured worker dies during the policy term, whether the death is natural or accidental. Under the standard NIA-approved term specification used across insurers, the base death benefit is NPR 1,000,000 (10 lakh). This amount is paid directly to the nominee and is separate from any Welfare Fund grant or employer/foreign compensation.

On top of the base sum assured, the standard policy layers several add-ons that address the specific hardships of an overseas death. Insurers commonly list an additional NPR 100,000 toward funeral costs, NPR 100,000 toward repatriation of the body where death occurs abroad and repatriation is documented, and up to NPR 200,000 as an income-loss/family support supplement. When these add-ons apply together, total relief can approach roughly NPR 1.4 million, which matches figures cited by insurers and the labour ministry for a typical death claim.

The policy also covers the worker while alive. Permanent total disability is generally compensated up to the full sum assured of NPR 1,000,000, partial/temporary disability is paid on a scale (commonly up to about NPR 500,000 depending on severity), and medical treatment reimbursement of up to around NPR 100,000 is available. Many insurers offer an optional critical-illness rider (covering a defined list of serious diseases, often for a payout near NPR 500,000) for a small extra premium. Exact benefit tables and exclusions vary by insurer and by the version of the policy, so families should read the policy schedule.

Because these numbers are set by the approved product specification rather than by each company competing on benefits, the death benefit and add-ons are broadly standardised across insurers; the main real difference between companies is service quality and claim-settlement speed rather than the amount paid.

The premium is a one-time charge for the covered period rather than a monthly payment, and it rises with the worker's age and the length of cover. Insurers use three broad age bands: 18-35 years, 36-50 years and 51-64 years, with entry generally allowed from age 18 up to 64 and terms available from one year to about six and a half years. Younger workers pay the least because their mortality risk is lower.

Published rate tables (for example Citizen Life Insurance's approved schedule) illustrate the spread: for the youngest 18-35 band a premium runs from roughly NPR 1,486 for a one-year term up to about NPR 5,728 for a six-year term; the 36-50 band runs from about NPR 2,175 to NPR 8,411; and the 51-64 band from about NPR 5,076 to NPR 16,820. Adding the optional critical-illness rider typically increases the premium by a small fixed amount (around NPR 400). In everyday terms, most Gulf- and Malaysia-bound workers on a standard two-year contract pay somewhere in the region of NPR 3,500 to NPR 5,500 for the term policy.

Cover is tied to the employment contract and is commonly written for, or renewed every, two years to match the typical labour-contract cycle; a worker who extends a stay abroad must keep the policy in force. Rates and bands are set within the NIA-approved specification, so they are similar from company to company; the figures above are indicative and can change when the specification is revised, so confirm the current schedule with the insurer at the time of purchase.

It is worth noting that the mandatory term policy is under policy review. In 2025 the labour ministry began drafting an amendment to the Foreign Employment Act that would fold insurance and welfare contributions into a single fund and reconsider the compulsory private term-insurance model; that reform had not been enacted as of mid-2026, so the rules described here remained in force.

Distinct from the private insurance policy, the government runs the Foreign Employment Welfare Fund (Vaideshik Rojgar Kalyankari Kosh), established under Section 33 of the Foreign Employment Act, 2064 and administered by the Foreign Employment Board (FEB). Every departing worker pays a one-time contribution into this fund before departure - commonly NPR 1,500 for those on permits up to three years (typically Gulf countries and Malaysia) and NPR 2,500 for longer contracts and destinations such as South Korea and Israel.

The fund provides a state subsistence grant to the family of a worker who dies during, or shortly after, foreign employment, and this is paid in addition to any private insurance payout. The grant amount was NPR 700,000 for several years; in December 2024 the labour minister announced an increase to NPR 1,000,000 (10 lakh) for families of deceased workers. The fund also supports critically injured or seriously ill returnees, covers rescue and repatriation of workers in distress, and funds scholarships for the children of deceased workers.

The fund's scope has widened over time. Rule amendments extended eligibility so that families can qualify even when the worker died at home during an annual break or otherwise within the contract/return window (broadly, death, injury or serious illness occurring during employment or within about a year of return). The scale of the fund is significant: in fiscal year 2023/24 the FEB disbursed about NPR 699.91 million to the families of 1,346 deceased workers and about NPR 194.39 million to 653 injured workers.

Families should treat the insurance payout and the Welfare Fund grant as two separate claims filed with two different bodies - the insurer for the policy money, and the Foreign Employment Board (via the local government) for the state grant. Missing one means leaving money unclaimed.

After a death abroad, two parallel processes run. For the private policy, the family (through the nominee) notifies the insurance company in writing as soon as possible; the insurer then issues a letter listing the documents needed and settles the claim once they are verified. For the state grant, an immediate family member applies at the local level (ward/municipality), which verifies the papers and helps register the death; the file is forwarded to the Foreign Employment Board in Kathmandu, and after final verification the Board deposits the grant into the bank account of the nearest eligible relative.

In an overseas death, the Nepali diplomatic mission or embassy in the destination country typically assists with certifying the death, arranging repatriation of the body, and attesting documents - which matters because the repatriation and funeral add-ons require documented proof. Nepal is also moving toward an integrated online system so that families can eventually apply for the welfare grant and scholarships remotely rather than travelling to offices.

Timelines vary. Straightforward claims with complete, attested paperwork are settled fastest; delays usually come from missing death certificates, unclear nominee/relationship documents, or a lapsed policy. Families are advised to keep the worker's labour permit, policy paper, passport and contract copies safe before departure, since these are the first documents any claim needs.

Insurers and the Foreign Employment Board ask for overlapping but slightly different paperwork, so families should prepare one master set of attested copies. For the insurance claim, the insurer's own death-claim and foreign-employment claim forms must be completed, together with proof of death, proof of the nominee's identity and relationship, and the worker's employment and travel records.

Documents are typically required to be attested (by a Notary Public and, for a death abroad, by the Nepali embassy or the relevant authority in the destination country). Because an overseas death often involves a foreign-language death certificate and a post-mortem or medical report, families may also need certified Nepali/English translations. Keeping originals safe and making several attested photocopies at the outset avoids repeated trips.

The list below reflects the documents insurers and the Board most commonly require; the exact set depends on the insurer, the destination country and the cause of death, so always confirm against the letter the insurer sends and the checklist at the local body.

The mandatory term policy is sold by life insurance companies licensed by the Nepal Insurance Authority and recognised by the Department of Foreign Employment. Because the death benefit, add-ons and premium bands follow a common NIA-approved specification, the amounts paid are broadly the same whichever licensed company a worker buys from. The practical basis for choosing is therefore reliability and claim-settlement record, not a bigger headline benefit.

Recruitment agencies frequently arrange the policy as part of the pre-departure package, but the worker (or family) should still obtain and keep the actual policy document, verify the sum assured and term, and confirm the nominee is correctly named - an incorrect or missing nominee is a common cause of claim disputes. Workers can cross-check that a company is licensed on the Nepal Insurance Authority website and that it is listed among DoFE-recognised insurers.

A large number of licensed life insurers offer the product. Examples recognised in the market include Nepal Life Insurance, National Life Insurance, Life Insurance Corporation (Nepal), Himalayan Life, IME Life, SuryaJyoti Life, Sun Nepal Life, Sanima Reliance Life, Reliable Nepal Life, Citizen Life, Asian Life and Rastriya Beema/Jeevan Beema among others. The definitive, current list is the one published by the Nepal Insurance Authority and the Department of Foreign Employment, which families should treat as authoritative because company names and licences change over time.