All You Need to Know about NRI Insurance Plan Options

One of the most important aspect that NRIs need to consider is getting adequate insurance coverage. With families  often straddling between India and their country of residence, NRIs need to have appropriate insurance coverage in both locations. This article explores the types of life insurance plans for NRIs in India.

Life insurance for NRIs
 

Life insurance provides financial security to your family in case of untimely death or critical illness. As an NRI, there are a few life insurance plans tailored for your needs:

Term life insurance for NRIs
 

Term life insurance provides life coverage at an affordable premium for a fixed term of 10-30 years. If the policyholder passes away during the term, the sum assured is paid to the nominee. This is a necessity for NRIs to secure their family's financial future in India. Several insurers offer term insurance for NRIs where premiums can be paid in foreign currency from abroad. The maximum entry age is usually 65 years.

NRI unit linked insurance plans
 

Unit linked insurance plans (ULIPs) offer both life insurance as well as investment opportunities. A portion of your premium goes towards your life cover while the remaining is invested in market-linked funds of your choice. This allows your money to grow along with the market performance. ULIPs can be useful for long term goals like your child's education or retirement. Premiums are flexible and can be paid periodically from abroad in foreign currency.

NRI child plans
 

Many insurers offer dedicated child insurance policies catering to NRIs looking to secure their child's future financial needs like higher education, marriage, etc. Premiums are low and can be paid annually or periodically for a long term of 18-25 years. Sum assured increases automatically each year to beat inflation. This ensures your child is protected financially even while living abroad as an NRI.

Health insurance for NRIs
 

When living abroad, an unexpected medical emergency can drain finances quickly without adequate health coverage. International travel health insurance policies may not always cover expenses incurred in India. Here are some good health insurance options:

NRI mediclaim insurance
 

Mediclaim provides comprehensive hospitalisation coverage for medical, surgical treatments taken in India. You can customise the sum insured as well as add optional covers like domiciliary treatment, pre/post-hospitalisation, etc. Premiums are quite affordable for NRIs considering healthcare costs in India. NRIs can opt for individual as well as family floater policies.

Overseas mediclaim policy
 

This policy provides coverage for medical treatment taken overseas as well as in India. Insurers offer plans custom tailored for NRIs with flexibility of premium payments through NEFT or from abroad in foreign currency. You can choose from a wide sum ranging from Rs. 3-50 lakhs. Pre-existing diseases are covered after specified waiting periods.

Traditional Plans

This is a regular premium payment term plan which allows partial withdrawal of premiums paid at regular intervals. In the event of the policyholder’s demise during the term, the full sum assured is paid while on survival the amount withdrawn can be seen as a 'gift'. This helps offset high costs of living abroad as an NRI.

High sum assured plans.
 

Insurers let NRIs opt for a higher sum assured under term plans than normal limits based on their annual income. This allows securing large future goals for themselves or their family back in India. The maximum sum assured can go up to Rs.10-15 crore under such plans for NRIs.

Joint life plans
 

For married NRIs concerned about each other's well-being, insurers offer joint life plans that provide insurance coverage for the unfortunate demise of spouses. This ensures the survivor gets financial assistance after the loss of a partner living abroad.

Premium waiver rider
 

This rider provides waiver of all future premiums on occurrence of qualifying critical illnesses. This protects the family's financial interests if the policyholder is unable to pay premiums due to health issues while living overseas.

Investment options for NRIs
 

NRIs need to smartly invest their savings for achieving goals such as their financing their child’s academic future besides getting insurance. Here are some investment avenues:

NPS for NRIs
 

National Pension Scheme (NPS) allows NRIs below 60 years to invest through registered NRIs. You can contribute up to Rs. 2.5 lakhs annually from abroad that qualifies for tax benefits under section 80C of the Income Tax Act. Contributions made in INR or foreign currency from NRE/NRO accounts receive similar tax treatment. OCIs & PIOs are not eligible to subscribe for National Pension Scheme

Equity mutual funds
 

Mutual funds provide an easy avenue for NRIs to participate in Indian stock markets. Most fund houses allow investing through NRO accounts. Dividend payouts are tax exempt in the hands of NRIs. ELSS funds also offer tax benefits under Section 80C. Index funds minimise stock-specific risks for hands-off investors living abroad. 

Corporate fixed deposits
 

Leading NBFCs and private banks offer fixed deposits for NRIs with attractive interest rates, especially senior citizens, while providing high safety through AA or higher rated issuers. Interest earned is taxable as per DTAA between India and the country of residence.

Bonds
 

Sovereign gold bonds, recapitalisation bonds issued by leading financial institutions, tax-saving infrastructure bonds, and NHAI and REC bonds provide stable returns compared to deposits for conservative NRI investors. However, please note that not all Bonds are eligible for investment by NRIs. Do note that the interest earned is taxable.

Conclusion

The insurance and investment landscape in India has become more conducive for NRIs in recent years. Proper financial planning can help secure the family's interests in both the home and host countries. Opt for policies allowing flexibility of premium payments from abroad and choose suitable risk-return products with the set financial goals in mind. With adequate coverage and judicious investments through both rupee and foreign currency avenues, NRIs can confidently tackle the uncertainties of living abroad as well as their responsibilities in India.

Disclaimer

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