Can NRI’s Buy ULIPs in India?

Can NRIs buy ULIPs in India?

Yes, Non-Resident Indians (NRIs) can buy ULIPs in India. The Foreign Exchange Management Act (FEMA) permits NRIs to make investments in India, and this includes investments in Unit Linked Insurance Plans. There are absolutely no restrictions preventing NRIs from investing in ULIP plans, provided that they satisfy all the Know Your Customer (KYC) norms for investing in such life insurance-investment plans.

Who is an NRI?

An NRI is an Indian citizen who resides outside India temporarily and holds a valid passport issued by the Indian Government. For instance, individuals residing abroad on a visa issued for employment or business purposes are considered to be Non-Resident Indians.

NRIs get to enjoy all of the benefits applicable to resident Indian citizens, including the right to invest. If you’re categorized as a non-resident, you can still enjoy the benefits of investing in India. And Unit Linked Insurance Plans (ULIPs) are one of the preferred investment options for NRIs keen on purchasing investments in their home country.

What is ULIP?

If you’re planning to invest in India, one of the many questions you may have unanswered is this: what is ULIP? A Unit Linked Insurance Policy (ULIP) is essentially a unique hybrid investment option that combines both insurance and investment aspects. The premium that you invest in a ULIP is split into two parts.

A portion of your premium is directed towards providing you with a life cover, while the other part is invested in the financial markets. ULIPs come with a minimum lock-in period of 5 years during which withdrawals are not permitted.

Why should NRIs invest in India?

Non-resident Indians have more than one reason to consider investing in their home country. Here’s a quick look at some of them.

• India is among the fastest growing economies in the world. And purchasing investments from banks and financial institutions based in India offers NRIs new investment opportunities coupled with the possibility of favourable returns.

• The Indian financial market also gives NRIs a wide range of investment options to choose from. Right from non-market-linked fixed income alternatives to market-linked options like ULIPs, NRIs have no dearth of choices.

• Investing in India allows non-resident Indians to take advantage of the country’s stock market, particularly through options like ULIPs, which combine the benefits of investment and life insurance. In fact, possibility of returns on ULIP plans are higher when you remain invested for the long term.

• By purchasing investment plans in India, you, as an NRI, can ensure that your investment portfolio is aligned with your life goals for various stages in life. Right from meeting objectives like creating an emergency fund to helping you save for your child’s education, investments in India can be extremely helpful.

What are the documents NRIs require to invest in ULIPs in India?

NRIs who wish to invest in ULIPs in India will need to submit a set of documents in order to be eligible for the investment. While the exact list of documents may vary marginally from one insurance provider to the next, these are the proofs generally required to invest in ULIPs subject to underwriting guidelines of the company.

• A scanned copy of your passport that serves as proof of your age and identity.

• A recent passport-sized photograph

• Proof of residence in India

• Proof of residence overseas

• Proof of income as required by the service provider

• Overseas Citizenship of India (OCI) or Persons of Indian Origin (PIO) Card if you are a permanent overseas citizen

• A copy of your PAN care or Form 60, if you possess income that is earned in India

• A Foreign Residency Supplementary Questionnaire for NRIs or PIOs

These documents are required in order to comply with the applicable Anti-Money Laundering and Know Your Customer (KYC) norms./

What are other important things NRIs investing in ULIPs in India should know?

Aside from the documentation requirements, NRIs investing in ULIPs in India should also be aware of other conditions, regulations, and benefits associated with this financial move. Here is some such information that can prove useful.

Can NRIs claim tax exemptions by investing in ULIPs in India?

ULIP tax benefits are threefold as per the sections of the Income Tax Act, 1961. The premium paid is deductible under section 80C whereas the claim proceeds are tax-free as per section 10(10D) of Income Tax Act, 1961. And the long-term capital gains from ULIPs are also exempt from tax. NRIs too can enjoy these ULIP tax benefits by investing in India. The above mentioned tax deductions/exemptions are subject to changes in tax laws, as amended from time to time.

How can an NRI pay the premium for investing in ULIPs?

If you wish to invest in ULIPs in India, you can pay your premium through any of the following banking methods.

• Through an Indian bank account

• Through an NRE account or an NRO account maintained with Indian Bank

What modes of payment can be used by NRI investors to pay their premium?

If you’re an NRI investing in ULIPs in your home country, you can pay your premium through any of these options.

• Domestic or international credit cards

• Internet banking

• Debit cards

• Online wallets like PayTM and Google Pay

• Credit Card Standing Instructions (CCSI)

• National Automated Clearing House (NACH)

• Online ECS mandates

What are the benefits of investing in ULIPs for NRIs?

NRIs who invest in ULIPs stand to benefit in several ways. Here’s a look at some of the advantages of investing in a ULIP scheme.

• You get to enjoy optimum ULIP plans returns over the course of your investment tenure.

• Additionally, ULIP tax benefits are also aplenty, since you can gain tax-saving advantages on the premium paid as well as on the death or maturity benefits paid out.

• ULIPs come with a lock-in period of 5 years, so they can be useful as a long-term investments plan to get your life goals done.

• You get to enjoy the benefits of life insurance coupled with investment.