Mistake 1: Choosing the Lowest Premium Without Understanding Coverage
It is so easy to opt for a policy simply because the premium is light on the pocket. Many UAE NRIs may opt for the most basic plan, thinking they have made a wise financial decision. But in truth, lower premiums come with compromises—limited coverage, shorter tenure, or exclusions that may not suit your life stage or family requirements. For example, if you choose a plan with a low sum assured that can be inadequate for your loved ones. ,.
Selecting life insurance solely on price could result in your family being underinsured. The coverage amount must be high enough to replace your income, pay off liabilities, and keep your loved ones financially independent in the event of your untimely death. As experts suggest, calculate your "human life value" to determine adequate life insurance coverage rather than focusing solely on premiums when purchasing life insurance.
How to avoid?
Spend time learning about the coverage features and benefits of the policy and if it meets your family's needs back home. Use a life insurance calculator for better clarity. It’s good to compare benefits—more than costs—between policies. Spending a little more now may help prevent your family from financial stress later.
Mistake 2: Not Mentioning NRI Status
It's a tiny aspect that most people miss—but not revealing your NRI status when purchasing life insurance in India can have larger issues later on. Certain NRIs, particularly those who have dual residencies or travel often between nations, forget to declare their non-resident status. However, declaring your NRI status is important from the perspective of life insurance underwriting.
If your insurance company isn't aware that you reside abroad, then your policy may be incorrectly categorised. That impacts premium calculation, and may even cause a hassle during claim settlement leading to claim denial or delay. It's not merely an address issue—it's a risk assessment problem and how the policy is handled.
How to avoid?
Always inform your NRI status clearly in the application. Give correct contact information, overseas address etc. Honesty enables smooth underwriting and safe claims. It is better to be safe than sorry.
Mistake 3: Not Considering Family’s Location
Generally, NRIs opt for a plan without considering where their loved ones are located. If your nominees are located in India and you buy an international life insurance coverage, they might have trouble collecting the policy proceeds in your absence. Moreover, if there are errors in the nominee details, the claim might get delayed. Alternatively, if your nominees are in India, they might not know the claim process to follow to get the policy proceeds. Most of these discrepancies cost families valuable financial assistance because of the delay or denial of the claim.
How to avoid?
Before buying, verify if the insurer has international claim handling facilities and it provides online assistance. Make sure your nominee is informed about the steps involved in a claim and has access to the required documents. Always keep your address and other information updated in the policy to avoid any hiccups later. This forward thinking ensures the claim process is smoother—even from abroad.
Mistake 4: Ignoring Riders & Add-ons
It's simple to concentrate only on the base policy and forget about riders or add-on options that can greatly improve your coverage. Among the most popular are critical illness rider, accidental death benefit rider, and waiver of premium riders, all offered for a relatively small additional cost and are subject to availability with the plan.
Adding riders plugs important gaps. For instance, if you are diagnosed with a serious health condition, a critical illness rider covering the said illness pays out a lump sum that can help in paying for the hospital costs, cover living expenses, or safeguard long-term savings. Likewise, an accidental death rider pays out an extra benefit if your death is caused by an accident. Riders is available at an additional nominal premium but provides financial protection against severe financial shocks1.
How to avoid?
Check riders during plan selection and determine which meet your requirements. Choose only those that genuinely fit your life stage, existing cover, and financial responsibilities, so your policy stays effective without becoming a burden. Just make sure to know coverage limitsand exclusions to avoid surprises later on.
Mistake 5: Missing Policy Updates or Renewals
When living abroad, it's easy to miss reminders from your insurer—especially if you’ve changed your email, phone number, or moved to a new address. Many UAE NRIs forget to update their contact details with their insurer, leading to missed premium notices or important policy updates. This can result in policy lapse, loss of benefits.
Just buying a life insurance policy is not enough. It has to be reviewed every now and then so that it remains in line with your present situation in life. Marriage, a child’s birth, or income level changes can influence your need for coverage. Forgetting to review it regularly or not renewing your policy at the right time can compromise the very protection you actually sought for your family.
How to avoid?
Arrange auto-renewal or reminders. Access your insurer's portal every 6–12 months to confirm policy information, review contact details, and see if the policy is still achieving what it was designed to accomplish.
Conclusion
Buying life insurance is a key part of protecting your family’s financial future—more so when you’re living abroad. For UAE NRIs, even small oversights during the buying process can create big hurdles later, especially during claims.
Taking time to understand common missteps and planning carefully ensures your policy truly supports your loved ones when it matters most. By remaining aware and thinking critically about your decisions, you not only get the proper coverage but also prevent future headaches. Spending that extra time now can translate into long-term peace of mind for you and your loved ones.
FAQs
What if I relocate to another country?
Most Indian life insurance policies remain valid even if you move to a different country. Just inform your insurer about the change in your residency status to avoid any issues during claims.
Can I change payment frequency?
Yes, most insurers allow you to switch between annual, half-yearly, quarterly, or monthly premiums. You can request this change through their online portal or customer support. The change is usually allowed on policy anniversaries.
Are premiums higher for NRIs living in the UAE compared to residents?
Premiums are usually similar, but they may be slightly higher if you're in a high-risk country or have to undergo additional medical checks. The rules can vary for different insurers, though.
Do NRIs get tax benefits on life insurance?
Yes, premiums paid would be eligible for deductions under Section 80C, and death benefits are usually tax-free under Section 10(10D) of the IT Act.
