Why Life Insurance Comes First?
For an NRI in Oman with ties in India, it is often recommended to purchase life insurance as a first step towards ensuring robust financial protection. Let’s take a look at some of the reasons why life insurance comes first for NRIs in Oman:
Financial Security for Dependents
Many NRIs in Oman have a dependent spouse, children, or parents back in India whose financial needs need to be protected. What better way to do so than with a life insurance plan designed to ensure a financial safety net even when the insured is not present?
Term insurance plans take centre stage in this context. They help provide financial security to your family in your absence and make a good addition to your financial planning process.
Guaranteed* Income for Ageing Parents
Through savings-oriented life insurance plans which pay the policy benefits in periodic payments , you can create a regular income. Moreover, money-back life insurance plans also provide regular payouts to give you additional income flow. This brings financial stability and puts them in a better position to care for their ageing parents' needs in India smoothly.
Insurance Cum Investment Plans
Life insurance plans, like ULIPs, in India, are now offering insurance with market-linked investment options, providing dual benefits. These plans enable NRIs in Oman to build a life insurance policy for their loved ones while also generating income, savings, or market-linked returns.
Term vs Investment-Linked Insurance Plans
When you are looking for the right life coverage, the first question that may come to your mind is, what type of coverage should you opt for? The top two options may include a term plan vs an market-linked investment plan, like ULIPs. As an NRI in Oman, choosing between term insurance and ULIPs should be a well-thought-out decision.
Let’s first understand the role of both these plans to make an informed decision:
Term Insurance Plan
Under term insurance, the insurance company provides a life cover for a specified number of years. If the insured passes away during the policy tenure, the insurer will pay the death benefit to the beneficiary in the form of a lump sum payment.
A term insurance is a reliable option as it offers:
- High coverage at affordable premiums
- The premiums paid toward term insurance qualify for deductions under Section 80C of the Income Tax Act. Furthermore, the death benefit received by the beneficiaries is exempt from tax under Section 10(10D), subject to specified conditions.
- GST refund benefit can be availed on the life insurance premium subject to eligibility criteria and submission of documents every year
- Financial protection for dependents in India
- Enhacement with riders to enhance coverage.
Pro Tip: NRIs can also look for term insurance plans like return of premium plans or opt for riders like increasing cover with lifestage upgrades, enhanced digital access and automation by making more seamless, technology-driven experience.
Investment-Linked Insurance Plans
Investment-linked insurance plans are designed to offer dual benefits: Life Cover and Market-Linked Returns. Here’s how investment-linked plans help NRIs:
Financial Security
ULIPs, , come with a life insurance coverage. This coverage helps in providing financial security to your loved ones in your absence. This financial security can play a vital role in giving your family financial assistance to meet their lifestyle expenses and fulfil their financial goals.
Wealth Creation
A unit-linked insurance plan combines the benefits of life cover and market-linked returns, as a portion of the premium is allocated towards building life cover, and the remaining amount is invested in various market-linked funds. ULIPs can help you get exposure to Indian markets and potentially earn performance-based returns. Along with partial withdrawals and top-ups, ULIPs allow tax-free switching as per the terms and conditions of the policy. Simply put, you can switch your funds from equity to debt and/ or vice versa without attracting any tax.
Quick Comparison: Term vs Investment-Linked Plans
Take a look at this table to understand the key differences:
| Feature | Term Insurance | Investment-Linked Plan |
|---|
Purpose
| Providing pure life cover for financial security
| Providing life cover and generating returns on investment
|
Returns
| Death benefits only, unless the return of premium option is chosen
| Death benefit if the insured passes away during the policy tenure. However, if the insured survives, a maturity benefit is paid.
|
Liquidity
| Not available
| Once the lock-in period is over, partial withdrawals are allowed
|
Best Suited For
| NRIs who wish to build a pure life cover for their dependents.
| NRIs who wish to combine the benefits of life cover and investment-linked returns.
|
Goal-Based Investment with Insurance Plans
NRIs in Oman looking for a safe and smart way to purchase plans that align with their specific needs often opt for goal-based insurance cum investment plans. Here’s how such plans help:
Planning for Retirement in India
For NRIs in Oman planning a peaceful retirement in India, retirement planning with annuities is a promising option in the life insurance space. Beginning early and saving systematically through retirement plans can make building a corpus affordable. There are various suitable avenues that you can choose from. For example, a deferred annuity lets you create a corpus for the future. This can further help you plan a financially stable retirement. These plans offer regular, lifelong income payouts after retirement, providing a dependable source of post-retirement income.
Children’s Education & Marriage Goals
NRIs in Oman who have their dependent children back in India or in Oman, look for plans that can safeguard the expenses of their children’s education and marriage in their absence. Life insurance child plans are designed specifically for this purpose. Some child plans also offer a waiver of premium benefit, where, in the event of the parent's death or disability, the premiums are waived and the plan continues. This helps in creating a secured corpus for the child’s future even when the parent is not around.
Pro Tip: Purchasing a ULIP or child insurance plans can help accumulate a good corpus to seamlessly take care of children's education, career, and marriage expenses.
Smart Add-Ons for Gulf NRIs
To enhance the coverage under life insurance, NRIs in Gulf countries can consider options for these riders:
Critical Illness Rider
Under this rider, the insurer pays a lump sum amount if the insured is diagnosed with any of the listed critical illnesses.
Waiver of Premium Rider
Under this rider, if the insured suffers serious illness or permanent disability, the insurer waives the payment of the premium, and the policy continues as it is.
Accidental Death Benefit Rider
Under this rider, if the insured meets an untimely demise due to a road accident, then the insurer provides an additional payout to the beneficiary.
Conclusion
Purchasing life insurance in India is a prudent step for NRIs in Oman, especially given that the Indian economy is now regarded as one of the fastest-growing economies in the world. With options like term plan, endowment plan, ULIP, ULPP, etc, the goals of every NRI are secured in India. All an NRI in Oman needs to do is explore and compare plans to find the right fit.
FAQs
How can an NRI in Oman pay for life insurance in India?
An NRI in Oman can pay for life insurance using their non-resident external or non-resident ordinary account or through swift transaction. Payments made towards premiums under a life insurance plan through an NRE account also allow a GST exemption subject to eligibility criteria and submission of documents every year
How can an NRI in Oman settle claims under life insurance?
To settle claims under a life insurance plan in India, the nominee must submit all the required documents, along with the policy papers, to the respective insurance company. Upon verification and approval, the insurance company settles the claim.
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