What Kind Of Life Insurance Do NRIs Need?

Non-resident Indians (NRIs) face unique financial challenges, balancing responsibilities for their families in India while securing their lifestyles abroad. Choosing the right life insurance can help them address these priorities effectively. 

Here’s what NRIs should consider:

Life Insurance Options For NRIs

Term Insurance

Why It’s Ideal: Provides high coverage at affordable premiums, ensuring financial protection for dependents in case of an untimely demise.

Key Benefits: Suitable for income replacement and securing family finances.

Guaranteed Return Plans

Why It’s Ideal: Perfect for NRIs seeking predictable returns.

Key Benefits: Offers long-term financial stability, suitable for planning children’s education or retirement goals.

Investment-Linked Plans (ULIPs)

Why It’s Ideal: Combines life insurance with market-linked investments.

Key Benefits: Allows NRIs to invest in equity or debt funds, providing both life cover and wealth creation.

Why Choose Policies Issued In India

Indian life insurance policies offer distinct advantages over plans issued overseas:

Cost-Effectiveness

Indian term insurance plans are significantly cheaper. For instance, a Rs 1 crore policy can cost up to 40 per cent less than similar coverage abroad.

Global Coverage With Easy Claims

Policies offer worldwide applicability with streamlined digital claim processes, ensuring beneficiaries receive timely payouts, no matter where they reside.

Tax Benefits

“Indian policies provide dual tax advantages under Section 80C (premium payments) and Section 10(10D) (maturity benefits), which may not be available in some foreign jurisdictions,” says Vivek Jain, head- investments, Policybazaar. 

Better Investment Opportunities

“Market-linked products in India, such as ULIPs, align with the country’s high-growth economy and often yield better returns compared to similar plans abroad,” says Jain. 

Things To Consider Before Buying Overseas Policies

While overseas insurance might seem convenient, it comes with potential drawbacks:

Complicated Claim Processes

Dependents in India may face challenges in navigating foreign claim settlement processes. Indian insurers offer more localized support, simplifying the procedure.

Higher Premiums

Term insurance plans from countries like the UAE can be 35-40 per cent costlier than Indian plans for comparable coverage.

Lower Investment Returns

Market-linked plans abroad may not match the returns offered by India’s fast-growing economy, making Indian investment-linked insurance more appealing.

NRIs should carefully assess their financial goals, responsibilities, and global lifestyles when selecting life insurance. Policies issued in India not only offer cost-effective premiums, attractive returns, and tax benefits but also simplify claim processes for beneficiaries in India. By tailoring their insurance strategy, NRIs can secure their families’ futures while maximizing financial growth opportunities.