Financial Protection for Family Back Home in India
Life insurance for NRIs in India is a compelling option, offering multiple benefits such as financial security for dependents in India, goal-based planning and more. Here’s how NRIs in the UK can benefit from life insurance plans in India:
Financial Protection for Dependents
Do you have loved ones who depend on you financially?
If yes, you need to consider life insurance plans such as term insurance plans to secure their financial future in your absence. Term plans are protection-oriented plans that pay a death benefit if the life insured passes away during the policy term. This corpus can give your family the much-needed financial help to deal with their expenses and goals.
Whether your dependents are in India or in UK with you, a term plan in India can take care of their financial needs.
Goal-Based Plans for Specific Needs
As an NRI in the UK, you might be interested in life insurance plans that cater to your specific needs, like children’s education and marriage expenses, guaranteed* income for parents, etc. For such needs, you have the option of goal-based life insurance plans. For instance:
- Child insurance plans allow you to build a corpus to easily meet the needs of your children.
- Retirement focused life insurance plans such as Annuity plans bring financial stability to your retirement. They can help you be financially secure during your second innings.
Insurance-Cum-Investment Plans
Insurance-cum-investment plans from Indian insurers can be a smart choice for NRIs looking to align their financial planning with personal goals. These plans are ideal for NRIs in the UK as they combine the benefits of life insurance and market linked investment through a single purchase, and offer the potential to grow wealth.
This combination not only safeguards the financial future of the insured individual’s family but also helps build a financial cushion through the potential of investment growth over time.
In case of ULIPs, a portion of your premium is directed towards life insurance coverage, while the other is invested in market linked funds. They also offer the freedom to control your money with features like switching, partial withdrawals post the lock in period, and top-ups (subject to policy terms and conditions)
INR-Priced Policies are Often More Affordable
While NRIs in the UK earn in British Pounds (GBP), many still opt for life insurance plans from India as Indian life insurance plans offer extensive coverage at lower premiums . A major draw is the affordability, due to the strong exchange rate between GBP and the Indian Rupee (INR), the premiums for Indian plans are often much more economical.
NRIs in the UK can opt for higher coverage due to greater income and living expenses. They are drawn by the combination of protection and wealth-building benefits that Indian plans offer through low premiums and strong investment potential.
However, before buying a policy, it’s wise to check currency exchange rates and understand how an INR-based plan fits into your broader financial strategy. While India's stock market shows strong historical growth, NRIs in Europe and the UK must consider the INR's movement against the Pound.
Tax Perspective & DTAA
The Double Taxation Avoidance Agreement was signed in 1993 between India and the UK to protect residents in both countries from paying double taxes on earned income if they have paid tax in one country. Under this agreement, residents are offered tax benefits through a single bilateral relief system. The agreement covers different types of taxes, including income, corporate, taxes on capital gains etc. Life insurance for NRIs also falls under this category. However, remember that death benefits offered under life insurance are free from tax liabilities.
Note: Apart from the DTAA, NRIs in the UK can also benefit from tax exemptions and deductions under the Income Tax Act, 1961.
Smooth Claim Settlement
Purchasing life insurance in India offers multiple benefits to NRIs in the UK, including a smooth claim settlement. Insurance companies in India are regulated by the Insurance Regulatory and Development Authority. Insurance companies must settle claims for death benefits within 15 days and in cases where a detailed investigation is required, claims have to be settled in 45 days.
A simple claim settlement process offered to NRIs in the UK is what makes life insurance policies in India even more appealing.
Conclusion
Juggling finances across borders can become overwhelming. However, when you have your long-term financial needs sorted with life insurance plans in India, purchasing insurance plans in the UK for your short-term needs is exactly what you need. Buying a life insurance policy in India can be a smart and effective way to safeguard the financial needs of dependents.
FAQs
How can an NRI in the UK pay for life insurance in India?
An NRI in the UK can pay for life insurance in India using their Non-Resident Indian (NRE) or Non-Resident Ordinary (NRO) account or through swift transaction. Additionally, payments made for premiums under life insurance in India through an NRE account come with a GST exemption subject to eligibility criteria and necessary required submission of documents every year
How can an NRI protect homes both in India and the UK?
An NRI looking to build financial protection for homes both in India and the UK can go for a combined approach. Using UK-based plans like motor, health, and home insurance, and Indian-based life insurance plans for long-term needs can be beneficial.
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