Why NRIs in UAE Should Consider Term Life Insurance in India?

What are term insurance plans?

Term insurance plans are protection-oriented life insurance plans that cover the risk of death during the policy tenure. If the life insured passes away during the policy term, death benefit is paid to the nominee. This benefit can help the family meet their financial needs and goals in the absence of the breadwinner.

Term plans have low and affordable premiums, allowing you to opt for a suitable sum assured to create an optimal corpus for your family’s financial needs. You can even enhance the coverage with optional riders for all-round protection.

Now that you know what term plans are and their basic features, the question arises – Why buy term insurance from India when living in the UAE?

There are various reasons for the same. Let’s understand.

Why Indian Plans Make More Sense?

Here are the reasons which make buying term insurance in India a good option for NRIs living in the UAE –

1. Easy Accessibility and Cost Advantage:

   Buying term insurance from the UAE has become easy . You can check the available plan options, choose the policy based on your coverage needs, and buy the policy online. This makes term plans easily accessible to NRIs in the UAE. All they have to do is visit the insurer’s website and buy the policy online. They can also purchase the policy offline if they come to visit India.

   Besides the easy purchase process, there is a definite cost advantage too. In many cases, term plan premiums in India work out cheaper than their UAE counterparts¹. So, you might prefer to get insured in India to save on the premium costs.
   

   
   

2. Regulatory Advantage & Tax Structure:

   FEMA (Foreign Exchange Management Act) regulations allow NRIs living anywhere in the world to buy term insurance plans from India. As such, given the regulatory allowance, you can buy a term insurance policy in India and enjoy its coverage worldwide.
   
   Then there is the tax advantage, too. The income earned from the UAE is tax-free both in the UAE and in India². However, if you have a source of income in India, such income might be taxable in your hands.
   
   With term insurance plans, you can minimise this tax liability. Term plans give you tax benefit on the premiums paid under Section 80C up to ₹1.5 lakhs. Moreover, the death benefit received is also tax-free in your family’s hands. This makes term insurance plans suitable for tax saving, too, while providing financial security.
   

   
   

3. Trust Factor:

   Term insurance plans bought from India are denominated in Indian Rupee (INR). The claims are also settled in INR, allowing your family back home quick access to funds that they might need.
   
   Since your roots are in India, you may naturally place greater trust in Indian insurers, as policies purchased back home often carry an inherent sense of reliability when it comes to claim settlement. Plus, since the claims would be settled in India, if your family is back home, there would be no need for transferring the benefit from the UAE. Your family can get the claim in INR and meet their needs without the need for currency conversion.

   
   

How UAE NRIs Can Apply from Abroad?

If you are thinking of applying for term insurance from India, here’s a simple step-by-step guide that you can follow to buy the policy –

1. Step 1 – Check and choose the right plan

   You might get different term insurance options to choose from. Compare the plans based on their coverage benefits. Choose a plan that best matches your financial needs.

   
   

2. Step 2 – Select the coverage details

   Once you shortlist the plan, choose the coverage details like –

   • Sum assured
   • Policy term
   • Premium payment term
   • Premium payment frequency
   • Optional riders, etc.
   • Choose a coverage that would meet your needs and provide the right corpus to your family in your absence.
      

3. Step 3 – Fill out the online proposal form

   After specifying the coverage details, fill out the online proposal form stating all the relevant information, like your personal details, medical history, occupational details, etc.

   
   

4. Step 4 – Upload your documents

   Supporting documents would be needed to underwrite your proposal and issue the policy. Some of the common documents include identity proof, age proof, NRI status proof, overseas address proof, passport, etc.

   Upload all the documents online to complete the application process.

   
   

5. Step 5 – Complete the medical formalities

   You might have to undergo medical check-ups before the policy is issued. You can check if the insurer offers telemedical facilities for the same for convenience. In some cases, physical check-ups might be needed, which you can undergo at any facility in the UAE. Once done, send the reports to the insurer back in India. If you are visiting India, you can get the tests done in India too.

   
   

6. Step 6 – Pay the premium

   Underwriting reviews the application, if approved, pay the premium for the policy online through your NRO or NRE bank account or through swift transaction. Remember, the policy is denominated in INR, and the premium should also be paid likewise.

   
   

Common Mistakes to Avoid

When buying term insurance from India, here are some common mistakes that you must avoid -

• Underinsurance

  Underinsurance means opting for a lower sum assured than required. This can defeat the whole purpose of buying term insurance, as it would provide inadequate financial security to your family.

  Assess your coverage needs and choose an optimal sum assured for adequate financial protection.

  
  

• Not disclosing NRI status

  Life insurance plans might have different underwriting guidelines for NRIs. Your premium can be affected too due to lifestyles, health issues, political war, etc. So, not mentioning your NRI status can be considered a breach of good faith.

  Disclose your NRI status when buying the policy to comply with the necessary regulations.

  
  

• Naming non-eligible nominees

  Naming a valid nominee simplifies the claim process and helps intended beneficiaries get easy and quick claim settlement. An incorrect or invalid nomination can create issues down the road.

  Nominate eligible individuals who should receive the money in your absence. In the case of minor nominees, appoint an appointee to receive the policy benefit on the minor’s behalf.

  
  

• Conclusion

  A term insurance plan in India can be the right financial decision for NRIs in the UAE. The plan can help in income replacement so that they can create a financial safety net for their loved ones in their absence.

  Complete with various benefits, term insurance plans in India can be the right choice. So, choose the right term insurance policy and enjoy an all-around financial security in a cost-effective and tax-efficient manner.

  
  

FAQs

1. Can I pay in AED?

   Indian term insurance plans are denominated in INR. So, premium payments are also accepted in INR. If you want to pay in AED, you can deposit the amount in your NRE account, and it will automatically be converted to INR. Then you can use the NRE account for premium payments in INR.

   
   

2. What happens if I move to another country?

   Your insurance policy would continue unaffected even if you move to another country during the policy term. Term insurance plans provide global coverage, irrespective of where you live. However, it is prudent to inform the insurance company of a change in residential address and update the same in your policy document for future correspondence.

   
   

3. Is the claim valid if I die abroad?

   Yes, term insurance plans cover death anywhere in the world. So, even if you pass away in a foreign country, your nominees would get a death benefit in India.