Moving Back to India from Canada? Why Life Insurance Should Be Step One

Risk Planning During the Transition

Amid visa paperwork and shifting careers, it’s easy to miss the importance of financial protection. No matter what your purpose is, be it shifting back to India for good or simply caring for your ageing parents, life insurance in India offers you a much-needed financial net.

Here's how it's a smart move to have a life insurance policy as a risk-mitigating strategy for NRIs.

1. Protect Your Family’s Financial Future

   A life insurance policy can help significantly to protect your family's financial future, especially when you're abroad. With the right coverage, you have the peace of mind knowing that your family is secured against any financial hardships in case something happens to you and when you're no longer around. The coverage amount can be used to cover daily expenses, settle debts, and do much more during a period of emotional turmoil.

   
   

2. Different Options for Different Needs

   When it comes to financial strategies, there’s no one-size-fits-all approach. There are various types of life insurance plans that can be beneficial for different needs. For example, if as an NRI in Canada, you can explore the following options:

   • If you are looking for high coverage with affordable premiums, then a term plan can be the right choice.
   • For building a stable corpus for your financial goals, you can consider an endowment plan.
   • If you wish to add some market exposure to your savings along with life cover, then maybe Unit Linked Insurance Plans, ULIP, can be the solution. Over the past few years, the Indian economy has been experiencing significant growth. The GDP growth rate of 6.4% in FY 2024-25 shows that the growth is poised to continue.³ Investing in the market-linked products like ULIP can be fruitful.
   • Child plans can suit young parents who wish to support their child at various stages of life.
   
   

3. GST Refund on Premiums

   Another prominent benefit of life insurance for NRIs is that you get to claim an 18% GST refund on your policy(subject to eligibility conditions and submission of requisite documents every year), making life protection more affordable for you and your family. You end up saving more.

   
   

4. Life Insurance Tax Benefits

   Tax benefits offered on your life insurance are another added advantage for NRIs. For instance, the premiums paid on your life insurance plan are eligible for tax deductions under section 80C of the old tax regime. While the death benefit is always tax-free, you may also be able to get tax deductions on the maturity amount under Section 10(10D). With this, you can reduce your taxable income, save more, and manage your risks more effectively.

   
   

5. Continued Life Insurance Benefits

   What makes term insurance an effective risk mitigating strategy, even during your movement from one country to another, is its continued coverage. It remains in effect like regular plans, where the sum assured and benefits remain unchanged, given that the premiums are paid on time.

Savings-Oriented Plans for Your Financial Goals

So, you worked for a few years in Canada and are now planning to return to India. It could be settling down, buying a house, retirement, children’s weddings, and so on. No matter what your goals are, life insurance should be the foundation of all of them. ULIPs, short for Unit-Linked Insurance Plans, are a popular life insurance option for NRIs. They offer the benefits of both life insurance and market-linked investment. These plans offer coverage while also balancing your returns. Here's how ULIPs can help NRIs achieve their financial goals.

1. Wealth Creation

   With ULIPs, NRIs can enjoy life coverage while accumulating wealth. ULIPs allow you to invest your money in a diverse range of securities, including debt funds, hybrid funds, equity funds, or more, based on your risk appetite and financial goals. Additionally, there is flexibility in fund selection and switching, allowing you to adjust your investment strategy as needed, such as when moving back to India.

   
   

2. For the Family's Financial Goals

   ULIPs are designed with a 5-year lock-in period, allowing you to build a good corpus. This, in turn, comes in handy to fulfil your financial goals, such as retiring and moving back to India, funding your child's college education, starting your own business or buying your dream house.

   
   

3. Favorable Returns

   Although returns on your ULIP are not guaranteed, they depend on market conditions, investment duration, type, and many other factors. If your funds are performing well, you may earn good returns on your investment. If we take a look at ULIP performance, may plans have shown returns as high as 12 to 15%.^2,*

   Did you know, ULIPs are quite flexible and allow you to switch between your funds without attracting taxes?

Integrating Insurance With Retirement Goals

As an NRI, your current portfolio may be aligned according to the foreign system, with investments in foreign currency. However, if you're planning to return to India, the dynamics change, starting from your income needs to tax liabilities, and more.

Integrating life insurance products, such as guaranteed or annuity plans, can ease this transition, helping you cover risks and provide financial protection.

Here are popular options to look out for.

1. Traditional Savings Plans

   The primary benefit of having a traditional savings plan is to avoid amid market fluctuations. You can create a stable corpus for your retirement.

   
   

2. Annuity Plans

   Annuity plans are another reliable insurance option that can help you with regular, periodic payments for life that can prove beneficial during and even after your country's transition. These are of two types: deferred and immediate annuity plans. You can select a suitable plan that suits your needs.

Bajaj Allianz Life (BALIC) options for Returnees

As mentioned earlier, purchasing an NRI life insurance plan in India offers a range of advantages. Further, at BALIC, you have a variety of options to choose from. This ensures that you pick a plan based on your life goals, and the same can be adjusted as you progress in life.

Here are some popular life insurance options for NRI returnees:

• Term Plans that offer death benefits to cover the unexpected demise.
• Child Plans can be availed of by parents to create a sizable corpus to secure the child's future and educational goals.
• Annuity Plans provide a cash flow even when you retire.
• Annuity Plans that help create a retirement corpus for assured annuity.
• Money-back Plans that offer a death benefit in the event of untimely demise and a maturity benefit upon policy maturity.

FAQs

1. What are some benefits of buying life insurance in India for NRIs?

   There are several benefits for NRIs of buying life insurance in India. For instance, premiums are comparatively lower, coverage is extensive, and you may choose from a variety of options. Additionally, there are tax benefits and GST benefits, among others.

   
   

2. What are the life insurance options for NRI returnees?

   Some popular life insurance options for NRI returnees include options like ULIPs, term plans, guaranteed plans, endowment policies, annuity plans, etc.